Kilihea Corporation produces a single product. The company\'s absorption costing

Question

Kilihea Corporation produces a single product. The company's absorption costing income statement for July follows:

During July, the company's variable production costs were $24.10 per unit and its fixed manufacturing overhead totaled $120,700.

Net operating income under the variable costing method for July would be:

$13,440

$23,940

$16,640

$31,240

Kilihea Corporation
Income Statement
For the month ended July 31 Sales (12,600 units) $579,600 Cost of goods sold 417,060 Gross margin 162,540 Selling and administrative expenses: Fixed 88,200 Variable 50,400 138,600 Net operating income $23,940

Explanation / Answer

Sales 579600 Variable expenses 354060 =(12600*24.1)+50400 Contribution margin 225540 Fixed expenses 208900 =88200+120700 Net operating income under the variable costing 16640

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