Table Inc.planned and manufactured 250,000 units of its single product in 2010,its first year of operations.Variable manufacturing costs were $30 per unit of production.Planned and actual fixed manufacturing costs were $500,000.Marketing and administrative costs (all fixed)were $300,000 in 2010.Table Inc.sold 200,000 units of product in 2010 at $50 per unit.Full costing operating income for 2010 is calculated to be:

Question

Quizplus · Accepted Answer

Full costing operating income can be calculated as:

Sales revenue - Cost of goods sold (COGS) - Marketing and administrative costs - Fixed manufacturing overhead

Sales revenue: 200,000 units sold x $50 per unit = $10,000,000

COGS: 
Variable manufacturing costs: 250,000 units produced x $30 per unit = $7,500,000 
Fixed manufacturing costs: $500,000 (planned and actual) 
Total manufacturing costs: $8,000,000 
COGS: 200,000 units sold x $40 per unit ($8,000,000/250,000) = $8,000,000

Marketing and administrative costs: $300,000

Fixed manufacturing overhead: $500,000

Full costing operating income: $10,000,000 - $8,000,000 - $300,000 - $500,000 = $1,200,000

Therefore, the best choice is C, $3,300,000.

Table Incplanned and Manufactured 250,000 Units of Its Single Product in in 2010,its