Nelson Company manufactures car mat sets, which are sold to wholesalers for $50 per set. Nelson’s variable manufacturing cost per set is $20, and the variable marketing cost per set is $2. Nelson’s total budgeted fixed overhead per year is $600,000. The sets budgeted and produced both totaled 200,000 and the sets sold totaled 120,000. Based on these facts, Nelson’s variable costing income is:
a. $2,400,000
b. $3,000,000
Selected: c. $2,760,000 This answer is correct.
d. $6,000,000
Correct! Variable costing income = [($50-$20-$2)x120,000] – $600,0000 = $2,760,000