Llywelyn,Inc.reports the following information for July: $$\begin{array} { | l | r | }
\hline \text { Sales Revenue } & \$ 950,000 \
\hline \text { Variable Costs } & 150,000 \
\hline \text { Operating Income } & 410,000 \
\hline
\end{array}$$ What is the total fixed cost using variable costing?
A) $800,000
B) $390,000
C) $260,000
D) $560,000

Question

Llywelyn,Inc.reports the following information for July: $$\begin{array} { | l | r | } 
\hline \text { Sales Revenue } & \$ 950,000 \
\hline \text { Variable Costs } & 150,000 \
\hline \text { Operating Income } & 410,000 \
\hline
\end{array}$$ What is the total fixed cost using variable costing?
A) $800,000
B) $390,000
C) $260,000
D) $560,000

Quizplus · Accepted Answer

Variable costing separates fixed and variable costs, and only includes variable costs in the cost of goods sold. Therefore, the total fixed cost can be calculated by subtracting the total variable costs from the total costs. Using the information given, we can calculate the total variable costs as follows:
Direct Materials: ($8 x 5,000) + ($6 x 7,000) = $74,000
Direct Labor: ($12 x 5,000) + ($16 x 7,000) = $148,000
Variable Overhead: ($3 x 12,000) = $36,000
Total Variable Costs = $258,000
Total Costs = $258,000 + Fixed Costs
Fixed Costs = Total Costs - Total Variable Costs
Fixed Costs = $390,000 (Choice B)

Llywelyn,Inc What Is the Total Fixed Cost Using Variable Costing? A)

Llywelyn,Inc What Is the Total Fixed Cost Using Variable Costing?
A)