Chilly Chips, Inc

Essay

Chilly Chips, Inc., a producer of ice cream, began operations this year. During this year, the company produced 160,000 cartons of ice cream and sold 145,000. At year-end, the company reported the following income statement using absorption costing:
Production costs per carton total $3.50, which consists of $2.30 in variable production costs and $1.20 in fixed production costs (based on the 16,000 units produced). Sixty percent of total selling and administrative expenses are variable. Compute net income under variable costing.