Question

Aces Inc., a manufacturer of tennis rackets, began operations this year. The company produced 6,000 rackets and sold 4,900. Each racket was sold at a price of \(90. Fixed overhead costs are \)78,000, and fixed selling and administrative costs are \(65,200. The company also reports the following per unit variable costs for the year. Prepare an income statement under variable costing.

Variable product costs \)25.00

Variable selling and administrative expenses 2.00

Short answer

Net income of the company is$165,500.

Step-by-step solution

Meaning of Net Income

The term net income refers to the amount of money left in the hand of a business concern after the settlement of all the associated expenses. Alloperating and non-operating expenses are deducted to compute net income from the revenues.

Preparation of income statement  

Aces Inc.
Variable Costing Income Statement
Particulars	Details	Amounts ($)
Sales	(4900*90)	$441,000
Less: Variable costs:
Variable product cost	(4900*25)	122,500
Variable selling and administrative expenses	(4900*2)	9,800
Contribution margin		308,700
Less: Fixed costs
Fixed overhead		78,000
Fixed selling and administrative costs		65,200
Net income		$165,500