Reference no: EM132240439

Question - Loring Company had the following data for the month:

Variable costs per unit:

Direct materials $4.00

Direct labor3.20

Variable overhead 1.00

Variable selling expenses 0.40

Fixed overhead is $4,000 per month; it is applied to production based on normal activity of 2,000 units. During the month, 2,000 units were produced. Loring started the month with 300 units in beginning inventory, with unit product cost equal to this month's unit product cost. A total of 2,100 units were sold during the month at price of $14. Selling and administrative expense for the month, all fixed, totaled $3,600.

What is operating income under variable costing?

a. $3,540

b. -$540

c. $11,340

d. $7,980

e. $3,740