Gardener Company produces plastic that is used for injection- modeling applications such as gears for small motors. In 2013, the first year of operations, Gardener produced 4,000 tons of plastic and sold 2,500 tons. In 2014, the company produced the same amount of plastic and sales were 5,000 tons (i.e. the company sold all of its inventory). In each year, the selling price per ton was $2,000, variable manufacturing costs per ton of plastic were $400, variable selling expenses were $600 for each ton of plastic sold. Fixed manufacturing costs were $4,000,000 and fixed administrative expenses were $500,000. What is the net income under variable costing in year 2013?

Gardener Company produces plastic that is used for injection- modeling applications such as gears for small motors. In 2013, the first year of operations, Gardener produced 4,000 tons of plastic and sold 2,500 tons. In 2014, the company produced the same amount of plastic and sales were 5,000 tons (i.e. the company sold all of its inventory). In each year, the selling price per ton was $2,000, variable manufacturing costs per ton of plastic were $400, variable selling expenses were $600 for each ton of plastic sold. Fixed manufacturing costs were $4,000,000 and fixed administrative expenses were $500,000. What is the net income under variable costing in year 2013?

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter20: Inventory Management: Economic Order Quantity, Jit, And The Theory Of Constraints

Section: Chapter Questions

Problem 7E: Ottis, Inc., uses 640,000 plastic housing units each year in its production of paper shredders. The...

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