Ranger Roadsters experienced the following costs in 2017 (Assume the same unit costs in all years): $\begin{array}{ll}
\text { Direct materials } & \$ 4.85 \text { per unit } \
\text { Direct labor } & \$ 2.10 \text { per unit } \
\text { Manufacturing overhead costs } &\\text { Variable } & \$ 2.25 \text { per unit } \
\text { Fixed } & \$ 75,075\
\text { Selling \& administrative costs }\
\text { Variable selling } & \$ 0.95 \text { per unit } \
\text { Fixed selling } & \$ 8,000 \
\text { Fixed administrative } & \$ 2,000
\end{array}$ There were 6,000 units in beginning inventory.During the year, the company manufactured 45,500 units and sold 48,000 units.If net income using variable costing was $82,500, how much is net income using full costing?
A)$78,375
B)$86,625
C)$76,725
D)$88,275

Question

Quizplus · Accepted Answer

Net income using full costing is higher than net income using variable costing by the amount of fixed manufacturing overhead costs that are included in the cost of goods sold. In this case, the fixed manufacturing overhead costs are $75,075, so the net income using full costing is $82,500 + $75,075 = $157,575.

Ranger Roadsters Experienced the Following Costs in 2017 (Assume the Same