Erie Corporation manufactures a single product that it sells for $35 per unit. The company has the following cost structure:

Variable costs per unit:

Production

$ 8

Selling and administrative $ 5

Fixed costs per year:

Production

$82,500

Selling and administrative $ 60,000

There were no units in inventory at the beginning of the year. During the year 30,000 units were produced and 25,000 units were sold.

The company's net operating income under variable costing would be:

O $407,500

O $421,250

O $431,250

O $417,500

To determine the net operating income under variable costing, we can use the following approach:

1. **Calculate Total Sales**:
   \[
   \text{Total Sales} = \text{Selling Price per Unit} \times \text{Units Sold} = 35 \times 25,000 = 875,000
   \]

2. **Calculate Total Variable Costs**:
   - **Total Variable Production Cost**:
     \[
     \text{Variable Production Cost per Unit} \times \text{Units Sold} = 8 \times 25,000 = 200,000
     \]
   - **Total Variable Selling and Administrative Cost**:
     \[
     \text{Variable Selling and Administrative Cost per Unit} \times \text{Units Sold} = 5 \times 25,000 = 125,000
     \]
   - **Total Variable Costs**:
     \[
     200,000 + 125,000 = 325,000
     \]

3. **Calculate Contribution Margin**:
   \[
   \text{Contribution Margin} = \text{Total Sales} - \text{Total Variable Costs} = 875,000 - 325,000 = 550,000
   \]

4. **Subtract Fixed Costs**:
   - **Total Fixed Costs**:
     \[
     \text{Fixed Production Costs} + \text{Fixed Selling and Administrative Costs} = 82,500 + 60,000 = 142,500
     \]
   - **Net Operating Income**:
     \[
     \text{Net Operating Income} = \text{Contribution Margin} - \text{Total Fixed Costs} = 550,000 - 142,500 = 407,500
     \]

### Conclusion
The company's net operating income under variable costing would be:
\[
\boxed{407,500}
\]

### Answer: 
**$407,500**

---

Would you like further details on any part of the calculation? Here are some additional questions that may extend your understanding:

1. How would net operating income change if more units were sold?
2. What would be the impact if variable costs per unit increased?
3. How would absorption costing affect net operating income?
4. How would fixed costs impact the break-even point?
5. What effect would increasing production have under variable costing?

**Tip:** In variable costing, fixed production costs are treated as period costs and expensed in the period they are incurred, unlike absorption costing.

Erie Corporation manufactures a single product that it sells for $35 per unit. The company has the following cost structure:

Variable costs per unit:

Production
$ 8

Selling and administrative $ 5

Fixed costs per year:

Production
$82,500

Selling and administrative $ 60,000

There were no units in inventory at the beginning of the year. During the year 30,000 units were produced and 25,000 units were sold.

The company's net operating income under variable costing would be:

O $407,500
O $421,250
O $431,250
O $417,500

Find out how to calculate the net operating income under variable costing for Erie Corporation, which produces 30,000 units annually, sells them at $35 per unit, and has specific fixed and variable costs. This guide provides step-by-step calculations, ideal for finance and accounting students.

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