Vaswani Company provides the following information for their first year of operations:
Sales, 5,000 units @ $10 each; total production, 7,500 units
Selling and administrative costs:
Fixed, $1,000; Variable, $1 per unit
Production costs per unit:
Direct materials, $2; Direct labor, $2; Variable overhead, $1
Fixed manufacturing overhead, $7,500
If Vaswani uses direct costing, how much is net income?
(Solved Homework): Vaswani Company provides the following information for their first year of operations:…
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CALCULATE NET INCOME UNDER DIRECT COSTING :
| Sales (5000*10) | 50000 | |
| Less : Variable costs | ||
| Direct material (5000*2) | (10000) | |
| Direct labour (5000*2) | (10000) | |
| Variable overhead (5000*1) | (5000) | |
| Variable selling and administrative (5000*1) | (5000) | (30000) |
| Contribution margin | 20000 | |
| Less : Fixed manufacturing overhead | (7500) | |
| Less: Fixed selling and administrative overhead | (1000) | |
| Net Income | 11500 |
