Pane Inc.manufactures hair brushes that sell at wholesale for $2.60 per unit.Budgeted production in both 2009 and 2010 was 3,000 units.There was no beginning inventory in 2009.The following data summarized the 2009 and 2010 operations:
Variable costing operating income for 2010 is calculated to be:

Question

Pane Inc.manufactures hair brushes that sell at wholesale for $2.60 per unit.Budgeted production in both 2009 and 2010 was 3,000 units.There was no beginning inventory in 2009.The following data summarized the 2009 and 2010 operations: 
Variable costing operating income for 2010 is calculated to be:

Quizplus · Accepted Answer

Variable costing operating income for 2010 can be calculated as follows:

Sales revenue: 3,000 x $2.60 = $7,800
Variable costs:
Direct materials: 3,000 x $0.50 = $1,500
Direct labor: 3,000 x $0.40 = $1,200
Variable overhead: 3,000 x $0.10 = $300
Total variable costs: $3,000
Contribution margin: $7,800 - $3,000 = $4,800
Fixed costs: $3,405
Operating income: $4,800 - $3,405 = $1,395

Therefore, the best choice is E: $1,395.

Pane IncManufactures Hair Brushes That Sell at Wholesale for $2