1)The following costs were incurred in April: Direct materials $39,400 Direct la

Question

1)The following costs were incurred in April: Direct materials $39,400 Direct labor $34,000 Manufacturing overhead $21,600 Selling expenses $19,700 Administrative expenses $38,600 Conversion costs during the month totaled: $73,400 $61,000 $55,600 $153,300

2)Ofarrell Corporation, a company that produces and sells a single product, has provided its contribution format income statement for March. Sales (6,700 units) $402,000 Variable expenses 268,000 Contribution margin 134,000 Fixed expenses 103,500 Net operating income $30,500 If the company sells 6,600 units, its net operating income should be closest to: $26,000 $28,500 $30,500 $29,979

Explanation / Answer

1.) The correct answer is option $55600

Conversation cost is sum of direct labour and overhead

Conversation cost = $34000+$21600= $55600

Conversation cost is cost of converting raw material in to product.

2.)The correct answer is $28500

Sale price per unit = $402000 ÷ 6700 units = $60

Variable cost per unit= $268000 ÷ $6700 units = $40

Contribution per unit = sales - variable cost

$60-$40= $20

Now contribution for 6600 units = 6600 units *$20= $132000

Fixed cost = $103500

Net operating income = 132000-103500=$28500

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