Wind Fall, a Manufacturer of Leaf Blowers, Began Operations This

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.
$\begin{array}{lr}\text { Sales }(8,500 \times \$ 45) & \$ 382,500 \\\text { Cost of goods sold }(8,500 \times \$ 20) & 170,000 \\\text { Gross margin } & \$ 212,500 \\\text { Selling and administrative expenses } & 60,000\\\text { Net Income }&\$152,500\end{array}$
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