Wind Fall,a Manufacturer of Leaf Blowers,began Operations This Year Production Costs Per Leaf Blower Total $20,which Consists of $16

Multiple Choice

Wind Fall,a manufacturer of leaf blowers,began operations this year.During this year,the company produced 10,000 leaf blowers and sold 8,500.At year-end the company reported the following income statement using absorption costing:
$\begin{array}{lr}\text { Sales }(8,500 \times \$ 45) & \$ 382,500 \\\text { Cost of goods sold }(8,500 \times \$ 20) & \underline{170,000} \\\text { Gross margin } & \$ 212,500 \\\text { Selling and administrative expenses } & \underline{60,000} \\\text { Net income } & \underline{ \$ 152,500}\end{array}$

Production costs per leaf blower total $20,which consists of $16 in variable production costs and $4 in fixed production costs (based on the 10,000 units produced) .Fifteen percent of total selling and administrative expenses are variable.
Compute net income under variable costing.

A) $146,500
B) $158,500
C) $237,500
D) $206,500
E) $246,500