Last year,fixed manufacturing overhead costs were $30,000,variable production costs were $48,000,fixed selling and administration costs were $20,000,and variable selling administrative expenses were $9,600.There was no beginning inventory.During the year,3,000 units were produced and 2,400 units were sold at a price of $40 per unit.Under variable costing,what would be the operating income (loss)?
A) $6,000.
B) $4,000.
C) ($2,000).
D) ($4,400).Op.income = 2,400 * $40 - 38,400 - 9,600 - 30,000 - 20,000 = ($2,000)

Question

Quizplus · Accepted Answer

The question asks for operating income using variable costing. To calculate this, we need to subtract all variable costs (costs that vary with production and sales) from the revenue generated. 
Revenue = 2,400 units * $40 = $96,000
Variable production costs = $48,000
Variable selling and administrative expenses = $9,600
Total variable costs = $48,000 + $9,600 = $57,600
Operating income using variable costing = Revenue - Total variable costs - Fixed manufacturing overhead costs - Fixed selling and administration costs
= $96,000 - $57,600 - $30,000 - $20,000
= $-2000 (negative because expenses exceed revenue, meaning there is a loss) 
Therefore, the correct answer is C.

Last Year,fixed Manufacturing Overhead Costs Were $30,000,variable Production Costs Were