Red and White Company reported the following monthly data:Units produced $2,000 unitsSales price $25 per unitDirect materials $1 per unitDirect labor $2 per unitVariable overhead $3 per unitFixed overhead $8,000 in totalWhat is Red and White's net income under variable costing if 980 units are sold and operating expenses are $12,000?A. $(1,380)B. $(2,000)C. $2,700D. $6,620E. $10,620

A. $(1,380)

Explanation:

The computation of the net income under the variable costing is shown below:

Net Income /(loss) = Sales Revenue - Variable cost - Fixed overhead - Operating expenses

 = (980 × $25) - (980 × $6) - $8,000 - $12,000

= $24,500 - $5,880 - $8,000 - $12,000

= ($1,380)

Hence, the correct option is A. ($1,380)

We simply applied the above formula so that the correct value could come

And, the same is to be considered

due to the changes the federal reserve is making the unused reserves will impact the economy by them facing inflation. inflation is definfed as the increase in pricing of a good or service but the decline of the value of money used for purchasing those items. when the economy has a high inflation rate, they are subject to money loss and hurt on the economy.