WebFlicks is an online DVD company that produces its own DVD copies of first-run movies that it sells for $8.00 each. The following information is available (Assume the same unit costs in all years): $\begin{array}{ll}
\text { Variable costs: }\
\text { Product royalty fees } & \$ 3.30 \text { per DVD } \
\text { DVD production } & \$ 1.20 \text { per DVD } \
\text { Selling and admin costs } & \$ 0.80 \text { per DVD }\
\text { Fixed Costs: }\
\text { Production } & \$ 128,000 \text { per month } \
\text { Selling and administration } & \$ 130,000 \text { per month }
\end{array}$ During June, 160,000 DVDs were produced and 144,000 were sold. There were 17,000 DVDs in beginning inventory. How much is net income per month under full costing?

Question

Quizplus · Accepted Answer

Net income per month under full costing is calculated as follows:Sales revenue: 144,000 DVDs x $8.00 = $1,152,000Variable costs:Product royalty fees: 144,000 DVDs x $3.30 = $475,200DVD production: 144,000 DVDs x $1.20 = $172,800Selling and admin costs: 144,000 DVDs x $0.80 = $115,200Total variable costs: $763,200Fixed costs:Production: $128,000Selling and administration: $130,000Total fixed costs: $258,000Total costs: $763,200 + $258,000 = $1,021,200Net income: $1,152,000 - $1,021,200 = $130,800

WebFlicks Is an Online DVD Company That Produces Its Own