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Question - Covington Manufacturing produces snow shovels. The selling price per snow shovel is $33.00. There is no beginning inventory.
Costs involved in production are:
Direct material $5.00
Direct labor 5.00
Variable manufacturing overhead 4.00
Total variable manufacturing costs per unit $14.00
Fixed manufacturing overhead per year $155,150
In addition, the company has fixed selling and administrative costs of $154,600 per year.
During the year, Covington produces 53,500 snow shovels and sells 48,350 snow shovels.
Required - What is net income using variable costing?
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