A manufacturing company that produces a single product has provided the followin

Question

A manufacturing company that produces a single product has provided the following data concerning its most recent month of operations:

Selling Price ....................................... $139

Units in beginning inventory ................. 0
Units produced ................................... 6700
Units sold .......................................... 6400
Units in ending inventory ...................... 300

Variable costs per unit:
Direct materials ................................... $43
Direct Labor ........................................ $35
Variable manufacturing overhead ...............$5
Variable selling and administrative .............. $6

Fixed costs:
Fixed manufacturing overhead ................. $227,800
Fixed selling and administrative ................... 83,200

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



a. $(15,900)

b. $19,200

c. $10,200

d. $9,000

Explanation / Answer

Sales revenue     6400 units X $139   $889,600
Less : Variable cost 6400 x ($43+$35+$5+$6)    $569,600
________
Contribution Margin                                          $320,000
Less : Fixed Costs ($227,800 +$83,200 )            $311,000
________
Net operating Income                                     $9000
                                                                   =========

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