Question

ser Corporation, which has only one product, has provided the following data concerning its most recent month of operations:

Selling price	$	137
Units in beginning inventory		1,000
Units produced		8,900
Units sold		9,000
Units in ending inventory		900

Variable costs per unit:
Direct materials	$	30
Direct labor	$	47
Variable manufacturing overhead	$	11
Variable selling and administrative expense	$	21
Fixed costs:
Fixed manufacturing overhead	$	71,200
Fixed selling and administrative expense	$	164,500

The company produces the same number of units every month, although the sales in units vary from month to month. The company's variable costs per unit and total fixed costs have been constant from month to month.

What is the net operating income for the month under variable costing?

Multiple Choice

• $15,500

• $16,300

• $4,200

• $25,100

Answer 1

Income Statement

Sales ( 9,000 x 137)	1,233,000
Variable Costs:
Direct material ( 9,000 x 30)	-270,000
Direct labor ( 9,000 x 47)	-423,000
Variable manufacturing overhead ( 9,000 x 11)	-99,000
Variable selling and administrative expense ( 9,000 x 21)	-189,000
Contribution Margin	$252,000
Fixed Costs:
Fixed manufacturing overhead	-71,200
Fixed selling and administrative expense	-164,500
Operating Income	$16,300

The net operating income for the month under variable costing is $16,300

Second option is correct option.

Please give a positive rating if you are satisfied with this solution and if you have any query kindly ask.

Thanks!!!