Reference no: EM131778470

Question - EnRG Inc., produces trail mix packaged for sale in convienience stores in the NE section of the US. At the beginning of April 2008, the company has no inventory of trail mix. Demand for the product is expected to remain constant at 50,000 bags per month. The company plans to produce to demand, 50,000 bags in April, however many of the employees take vacation in June, so the company will make 70,000 bags in May and 30,000 bags in June.

Costs for the 3 months are expected to remain unchanged. The costs for revenue for April, May and June are expected to be:

Sales revenue: $6/bag

Direct material cost: $0.80/bag

Direct manufactoring labor costs: $0.45/bag

Variable manufacturing overhead costs: $0.30/bag

Variable Selling Costs: $0.15/bag

Fixed manufactoring overhead costs: $105,000/month

Fixed Admin Costs: $35,000/month

Suppose the actual costs, marketing demand, and levels of production for April, May and June are as expected.

Compute operating income for April, May and June under variable costing?