What is the operating income using variable costing if units are sold for each?

$29,200

Explanation:

Computation of the operating income using absorption costing

Operating income using absorption costing

Sales Revenue $64,000

($160×400 units)

Less :Cost of Goods Sold ($26,800)

[($57×400 Units)+$4,000]

Gross Profit $37,200

Less:Selling and Administrative Costs ($8,000)

($12×400 units)+$3,200

$4,800+$3,200=$8,000

Operating Income$29,200

($37,200-$8,000)

Calculation for Cost of goods sold

Direct materials, $9 per unit

Direct labor $30per unit

Variable manufacturing overhead $18 per unit

Total =$57

Therefore the operating income using absorption costing will be $29,200

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