Raw materials cost per unit = $200,000 / 100,000 = $2 per unit
Direct labor cost per unit = $100,000 / 100,000 = $1 per unit
Manufacturing overhead (out of $200,000, $100,000 is fixed) Variable cost = $100,000 / 100,000 = $1/unit
Selling & Admin exp (out of $200,000, $100,000 is fixed) Variable cost = $50,000 / 100,000 = $0.50/unit
Computation of net operating Income from producing and selling 110,000 units.
Raw materials (110,000 units * $2/unit) = $220,000
Direct Labor (110,000 * $1/unit) = $110,000
Manufacturing Overhead [$100,000 + (110,000 *$1/unit)] = $210,000
Selling and Admin Exp [$100,000 + ($110,000 *$0.50/unit) = $155,000
Total cost = $695,000
Total sales = 110,000 * $10 per unit = $1,100,000
Net Operating Income = Total sales - Total cost
Net Operating Income = $1,100,000 - $695,000 = $405,000
Net Operating Income = $405,000
Option '3' is correct
QUESTION 2 Butteco Corporation has provided the following cost data for last year when 100,000 units...
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