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 = $123


Unit in beginning inventory = 0
Units produced = 1,000
Units sold = 900
Units in ending inventory = 100


Variable costs per unit:
Direct materials = $41; Direct labor = $26; VMOH = $4; Variable selling and administrative = $6


Fixed costs:
FMOH = $17,000; Fixed selling and administrative = $11,700
What is the net operating income for the month under variable costing?

Question 5 options:

$12,700

$5,600

$1,700

$14,400

Please show work!

Thank you in advance

$12,700

$5,600

$1,700

$14,400

Please show work!

Thank you in advance

Explanation / Answer

Per unit Total for 900 units Sales 123 110700 Less : Variable cost        Direct Material 41 36900         Direct labor 26 23400        VMOH 4 3600        Variable selling and administrative 6 5400 Contribution Margin 46 41400 Less : Fixed production expenses 17000              Fixed Selling & administrative 11700 Net operating Income 12700 Net operating income is 12700 , hence 1st option is correct

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