A manufacturing company that produces a single product has provided the following data concerning its most recent month of operations:

Units-beginning inventory 0
Units produced 6,700
Units sold 6,500
Units-ending inventory 200
Variable costs per unit
Direct materials $47
Direct labor 44
Variable manufacturing OH 6
Variable selling and administrative expense $11
Fixed costs:
Fixed manufacturing overhead $52,500
Fixed selling and administrative expenses $3,800

What is the net operating income for the month under variable costing?

Hi, your question is missing the selling price per unit, however important principles and calculations are explained below:

Variable Cost Product Costs = Only Variable Manufacturing Costs

Variable Cost Period Costs  = Fixed Manufacturing Costs + All Non Manufacturing Costs.

Product Cost per unit  = $47 + $44 + $ 6

                                     = $97.00

Calculation of net operating income for the month under variable costing

Sales ($pp × 6,500)                                                                            

Less Costs of Sales

Opening Stock of Finished Goods 0                                   0

Add Cost of Goods Manufactured ($97.00×6,700)    $649,900

Less Closing Stock of Finished Goods ($97.00×200)  ($19,400) $630,500

Contribution                                                                                        

Less Expenses

Fixed manufacturing overhead                                                      ($52,500 )

Fixed selling and administrative expenses                                    ($3,800)

Variable selling and administrative expense                               ($11×6,700)

Net Income/(Loss)                                                                              

Explanation: