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Question
Anchovy, Inc., a producer of frozen pizzas, began operations this year. During this year, the company produced 16,000 cases of pizza and sold 15,000. At year-end, the company reported the following income statement using absorption costing:
| Sales (15,000 x $48) | $720,000 |
| Cost of goods sold (15,000 x $19) | 285,000 |
| Gross margin | $435,000 |
| Selling and administrative expenses | 79,000 |
| Net income | $356,000 |
Production costs per case total $19, which consists of $15.50 in variable production costs and $3.50 in fixed production costs (based on the 16,000 units produced). Eight percent of total selling and administrative expenses are variable. Compute net income under variable costing.
Answer
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