Answer:
Net income= -819 million
Explanation:
Giving the following information:
Sales $18,769 Cost of goods sold $15,471 Selling, administrative, and other expenses 2,049 Total expenses $17,520 Income from operations $1,249 Assume that there were $3,860 million fixed manufacturing costs and $1,170 million fixed selling, administrative, and other costs for the year. The finished goods inventories at the beginning and end of the year from the balance sheet were as follows: January 1 $2,354 million December 31 $2,408 million Assume that 30% of the beginning and ending inventory consists of fixed costs.
COGS= beginning finished inventory + cost of goods manufactured - ending finished inventory
17,520= 2,345 + X - 2,408
cost of goods manufactured= 17,583
Now, we have to separate the fixed components from the variable.
cost of goods manufactured= direct materials + direct labor + allocated manufacturing overhead
Variable costs= 17,583 - 3,860= 13,723
We can calculate the variable cost of goods sold:
Variable costs manufacturing costs= 2345*0.70 + 13,723 - 2,408*0.70= 13,678.9
Variable selling and administrative= 2,049 - 1,170= 879
Income statement:
Sales= 18,769
Variable manufacturing costs= 13,678.9
Variable selling and administrative= 879
Contribution margin= 4,211.1
Fixed manufacturing costs= 3,860
Fixed selling and administrative= 1,170
Net income= -818.9
