Anchovy, Inc., a producer of frozen pizzas, began operations this year.During this year, the company produced 16,000 cases of pizza and sold 15,000.At year-end, the company reported the following income statement using absorption costing:
$\begin{array}{lr}
\text { Sales } ( 15,000 \times\$ 48 ) & \$ 720,000\
\text { Cost of goods sold } ( 15,000 \times \$ 19 ) & \underline { 285,000 }\
\text { Gross margin } &\$ 435,000 \
\text { Selling and adrninistrative } & \underline { 79,000 }\
\text { expenses } &\
\text { Net incorne } & \underline {\$ 356,000 }
\end{array}$ Production costs per case total $19, which consists of $15.50 in variable production costs and $3.50 in fixed production costs (based on the 16,000 units produced).Eight percent of total selling and administrative expenses are variable.Compute net income under variable costing.

Question

Anchovy, Inc., a producer of frozen pizzas, began operations this year.During this year, the company produced 16,000 cases of pizza and sold 15,000.At year-end, the company reported the following income statement using absorption costing:
 $\begin{array}{lr}
\text { Sales } ( 15,000 \times\$ 48 )  & \$ 720,000\
\text { Cost of goods sold } ( 15,000 \times \$ 19 ) & \underline { 285,000 }\
\text { Gross margin } &\$ 435,000 \
\text { Selling and adrninistrative } & \underline { 79,000 }\
\text { expenses } &\
\text { Net incorne } & \underline {\$ 356,000   }
\end{array}$ Production costs per case total $19, which consists of $15.50 in variable production costs and $3.50 in fixed production costs (based on the 16,000 units produced).Eight percent of total selling and administrative expenses are variable.Compute net income under variable costing.

Quizplus · Accepted Answer

The Answer of Anchovy, Inc., a producer of frozen pizzas, began operations this year.During this year, the company produced 16,000 cases of pizza and sold 15,000.At year-end, the company reported the following income statement using absorption costing:
 $\begin{array}{lr}
\text { Sales } ( 15,000 \times\$ 48 )  & \$ 720,000\
\text { Cost of goods sold } ( 15,000 \times \$ 19 ) & \underline { 285,000 }\
\text { Gross margin } &\$ 435,000 \
\text { Selling and adrninistrative } & \underline { 79,000 }\
\text { expenses } &\
\text { Net incorne } & \underline {\$ 356,000   }
\end{array}$ Production costs per case total $19, which consists of $15.50 in variable production costs and $3.50 in fixed production costs (based on the 16,000 units produced).Eight percent of total selling and administrative expenses are variable.Compute net income under variable costing.

Anchovy, Inc Production Costs Per Case Total $19, Which Consists of $15