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Compute operating income

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Reference no: EM13147121

EnRG Inc., produces trail mix packaged for sale in convienience stores in the NE section of the US. At the beginning of April 2008, the company has no inventory of trail mix. Demand for the product is expected to remain constant at 50,000 bags per month. The company plans to produce to demand, 50,000 bags in April, however many of the employees take vacation in June, so the company will make 70,000 bags in May and 30,000 bags in June.

Costs for the 3 months are expected to remain unchanged. The costs for revenue for April, May and June are expected to be:

Sales revenue: $6/bag
Direct material cost: $0.80/bag
Direct manufactoring labor costs: $0.45/bag
Variable manufacturing overhead costs: $0.30/bag
Variable Selling Costs: $0.15/bag
Fixed manufactoring overhead costs: $105,000/month
Fixed Admin Costs: $35,000/month

Suppose the actual costs, marketing demand, and levels of production for April, May and June are as expected.

1. Compute operating income for April, May and June under variable costing

Reference no: EM13147121

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