Khidir Company, which has only one product, has provided the following data conc
ID: 2470746 • Letter: K
Question
Khidir Company, which has only one product, has provided the following data concerning its most recent month of operations:
Selling price...............................................
$121
Units in beginning inventory.....................
300
Units produced..........................................
3,200
Units sold...................................................
3,400
Units in ending inventory..........................
100
Variable costs per unit:
Direct materials.......................................
$45
Direct labor.............................................
$45
Variable manufacturing overhead...........
$1
Variable selling and administrative.........
$7
Fixed costs:
Fixed manufacturing overhead...............
$70,400
Fixed selling and administrative.............
$6,800
The company produces the same number of units every month, although the sales in units vary from month to month. The company's variable costs per unit and total fixed costs have been constant from month to month.
8. What is the net operating income for the month under variable costing? Please show your work.
A) ($3,400)
B) $2,200
C) $1,000
D) $19,200
Selling price...............................................
$121
Units in beginning inventory.....................
300
Units produced..........................................
3,200
Units sold...................................................
3,400
Units in ending inventory..........................
100
Variable costs per unit:
Direct materials.......................................
$45
Direct labor.............................................
$45
Variable manufacturing overhead...........
$1
Variable selling and administrative.........
$7
Fixed costs:
Fixed manufacturing overhead...............
$70,400
Fixed selling and administrative.............
$6,800
Explanation / Answer
Option C is correct
1000
Calculation:
Sales revenue (3400×121) 411400 Less variable cost: Variable COGS(3400×91) 309400 Vvariable S.&G.Administration(3400×7) 33800 333200 Contribution margin 78200 Less fixed cost: Fixed manufacturing overhead 70400 Fixed selling&general administration 6800 77200 Operating profit 1000Related Questions
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