managerial accounting 457744

Wind Fall, a manufacturer of leaf blowers, began operations this year. During this year, the company produced 10,000 leaf blowers and sold 8,500. At year end the company reported the following income statement using absorption costing.

Sales (8,500 x $45) 382,500

cost of goods sold (8,500 x $20) 170,000

gross margin $212,500

selling and administrative expenses 60,000

net income $152,500

Production costs per leaf blower total $20, which consists of $16 in variable production costs and $4 in fixed production costs (based on the 10,000 units produced). Fifteen percent of total selling and administrative expenses are variable.

Compute net income under variable costing.

$146,500

$158,500

$237,500

$206,500

$246,500