AgRanch Co. is a farming corporation that grows and sells crops in the Midwest. The company is publically traded on the stock market: however, management prefers to use variable costing for decision purposes. The company's books are adjusted to arrive at Absorption Income for financial reporting purposes.
The company reported the following financial information for the past month:
The company tracks harvested crops that have not yet been shipped out as "in-process." This inventory of food decreased from 50 truckloads at the beginning of the month to 45 truckloads at the end of the month.
What was Variable Net Income?

Question

AgRanch Co. is a farming corporation that grows and sells crops in the Midwest. The company is publically traded on the stock market: however, management prefers to use variable costing for decision purposes. The company's books are adjusted to arrive at Absorption Income for financial reporting purposes. 
The company reported the following financial information for the past month:
  The company tracks harvested crops that have not yet been shipped out as "in-process." This inventory of food decreased from 50 truckloads at the beginning of the month to 45 truckloads at the end of the month.
What was Variable Net Income?

Quizplus · Accepted Answer

The Answer is Variable Income =
Absorption Income - (difference between Ending and Beginning Inventory) x Fixed Overhead/unit
Ending - Beginning Inventory = 45 - 50 = -5
Variable Income = $600,000 - (-5 units x $300unit) = $601,500