Westwood Company
Westwood Company has the following information the current year: $$\begin{array} { l l }
\text { Selling sales price } & \$ 300 \text { per unit } \
\text { Variable production costs } & \$ 80 \text { per unit produced } \
\text { Variable selling and administrative expenses } &\$ 32 \text { per unit sold } \
\text { Fixed production costs } & \$ 400,000 \
\text { Fixed selling and administrative expenses } & \$ 280,000 \
\text { Units produced } & 20,000 \text { units } \
\text { Units sold } & 16,000 \text { units }
\end{array}$$ The company had no beginning inventories
-Refer to Westwood Company. What is the net income using the variable costing method?
A) $480,000
B) $600,000
C) $1,200,000
D) $2,328,000

Question

Westwood Company
Westwood Company has the following information the current year: $$\begin{array} { l l } 
\text { Selling sales price } & \$ 300 \text { per unit } \
\text { Variable production costs } & \$ 80 \text { per unit produced } \
\text { Variable selling and administrative expenses } &\$ 32 \text { per unit sold } \
\text { Fixed production costs } & \$ 400,000 \
\text { Fixed selling and administrative expenses } & \$ 280,000 \
\text { Units produced } & 20,000 \text { units } \
\text { Units sold } & 16,000 \text { units }
\end{array}$$ The company had no beginning inventories
-Refer to Westwood Company. What is the net income using the variable costing method?
A) $480,000
B) $600,000
C) $1,200,000
D) $2,328,000

Quizplus · Accepted Answer

Under variable costing, only variable costs are considered in calculating net income. The contribution margin per unit is $300 - $80 - $32 = $188. Total contribution margin is $188 * 16,000 = $3,008,000. Subtract fixed costs ($400,000 + $280,000 = $680,000) from the total contribution margin to get the net income: $3,008,000 - $680,000 = $2,328,000.

Westwood Company Westwood Company Has the Following Information the Current

Westwood Company
Westwood Company Has the Following Information the Current