Kilihea Corporation produces a single product The companys a

Kilihea Corporation produces a single product. The company\'s absorption costing income statement for July follows:

During July, the company\'s variable production costs were $24.10 per unit and its fixed manufacturing overhead totaled $120,700.

Net operating income under the variable costing method for July would be:

$13,440

$23,940

$16,640

$31,240

Kilihea Corporation Income Statement For the month ended July 31
Sales (12,600 units)		$579,600
Cost of goods sold		417,060
Gross margin		162,540
Selling and administrative expenses:
Fixed	88,200
Variable	50,400	138,600
Net operating income		$23,940

Solution

Sales 579600 Variable expenses 354060 =(12600*24.1)+50400 Contribution margin 225540 Fixed expenses 208900 =88200+120700 Net operating income under the variable costing 16640