Wind Fall, a Manufacturer of Leaf Blowers, Began Operations This

question 13

Multiple Choice

Wind Fall, a manufacturer of leaf blowers, began operations this year.During this year, the company produced 10,000 leaf blowers and sold 8,500.At year-end the company reported the following income statement using absorption costing: $\begin{array}{lr}\text { Sales } (8,500 \times \$ 45) &\$ 382,500 \\\text { Cost of goods sold }(8,500 \times \$ 20) &\underline{170,000} \\\text { Gross margin } &\$ 212,500 \\\text { Selling and administrative expenses } &\underline{60,000 }\\\text { Net income } &\underline{\$ 152,500}\end{array}$ Production costs per leaf blower total $20, which consists of $16 in variable production costs and $4 in fixed production costs (based on the 10,000 units produced) .Fifteen percent of total selling and administrative expenses are variable.
Compute net income under variable costing.

• A)$146,500
• B)$158,500
• C)$237,500
• D)$206,500
• E)$246,500

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