Question

Farris Corporation, which has only one product, has provided the following data concerning its most recent month of operations: Selling price $ 112 8 00:12:58 Units in beginning inventory Units produced Units sold Units in ending inventory 8,950 8,550 400 Variable costs per unit: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative expense Fixed costs: Fixed manufacturing overhead Fixed selling and administrative expense $134,250 $ 8,800 What is the net operating income for the month under absorption costing?

Answer 1

Answer

--Correct Answer = Option #2: $ 16,850

A	Sale price per unit	$112
	Direct Material per unit	$18
	Direct labor per unit	$60
	Variable manufacturing overhead per unit	$6
	Fixed manufacturing overhead per unit ($134250 / 8950 units produced)	$15
B	Total product cost per unit	$99
C = A -B	Gross Profit per unit	$13
D = 8550 units sold x C	Total Gross Profits	$111,150
E = 8550 units sold x $ 10	Variable selling & admin expense	$85,500
F	Fixed selling & admin expense	$8,800
G = D-E-F	Net Operating Income	$16,850	Answer