Problem 5 Nelson Corporation which has only one product has

Problem 5: Nelson Corporation, which has only one product, has provided the following data concerning its most recent month of operations: Selling price $90 Units in beginning inventory Units produced Units sold Units in ending inventory 1,900 1,000 400 Variable costs per unit: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative $20 $10 $7 $10 Fixed costs: $38,000 Fixed manufacturing overhead Fixed selling and administrative $11,000

Solution

48) Contribution Margin $ 43,000 50) Net Operating Income $ -6,000 Working: Variable costing Income Statement: At Sales level of 1000 units Per Unit Total Sales $          90 $       90,000 Variable Costs: Direct Materials $          20 $       20,000 Direct Labor $          10 $       10,000 Variable Manufacturing Overhead $ 7 $         7,000 variable selling and administrative $          10 $       10,000 Contribution Margin $       43,000 Less: Fixed Costs: Fixed manufacturing overhead $       38,000 Fixed Selling and administrtaive $       11,000 Net Operating Income $        -6,000