Company sells 100,000 wrenches for $12.00 a unit. Fixed cost are $300,000.00 and net income is $200,000. What should be reported as variable expenses on the income statement?

To determine the variable expenses on the income statement, we first need to understand the components of the income statement. An income statement is a financial statement that reflects a company's revenues, expenses, and net income over a specific period. It consists of several sections, including revenue, cost of goods sold, operating expenses, and net income.

In this case, we are asked to identify the variable expenses. Variable expenses, also known as variable costs, are costs that change in direct proportion to the level of production or sales. They vary based on the number of units produced or sold, unlike fixed costs that remain constant regardless of the level of production or sales.

Given the information provided, we have the selling price per unit ($12.00) and the quantity of wrenches sold (100,000 units). We also know the fixed costs ($300,000.00) and net income ($200,000).

To calculate the variable expenses, we can subtract the fixed costs and net income from the total revenue generated by selling the wrenches.

Total Revenue = Selling Price per Unit * Quantity of Units Sold
Total Revenue = $12.00 * 100,000 units = $1,200,000.00

Variable Expenses = Total Revenue - Fixed Costs - Net Income
Variable Expenses = $1,200,000.00 - $300,000.00 - $200,000.00
Variable Expenses = $700,000.00

Therefore, the variable expenses to be reported on the income statement would be $700,000.00.