Red and White Company reported the following monthly data: 35. What is Red and W
ID: 2468554 • Letter: R
Question
Red and White Company reported the following monthly data:
35.
What is Red and White's net income under absorption costing if 1,050 units are sold and operating expenses are $17,000?
$7,150
($5,660)
$3,790
($1,490)
$15,510
36.
What is Red and White's net income under variable costing if 1,050 units are sold and operating expenses are $17,000?
$7,150
$15,510
($1,490)
$3,790
($5,660)
Units produced 2,700 units Sales price $32 per unit Direct materials $2 per unit Direct labor $3 per unit Variable overhead $4 per unit Fixed overhead $8,640 in totalExplanation / Answer
35) Total cost of production of 2700 units = 9 * 2700 + 8640 = $32940
Total cost of production of 1050 units = 32940 * 1050 / 2700 = $12810
Net profit = T. Revenue (32 * 1050) - 12810 - Operating expenses 17000 = $3790
36) T. Revenue= (32 * 1050)= $33600
Total cost of production of 1050 units = 32940 * 9 = $9450
Net profit = T. Revenue $33600 - VC $9450 - FC $8640 - Operating expenses $17000 = ($1490)
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