Academic Integrity: tutoring, explanations, and feedback — we don’t complete graded work or submit on a student’s behalf.

Farris Corporation, which has only one product, has provided the following data

ID: 2561685 • Letter: F

Question

Farris Corporation, which has only one product, has provided the following data concerning its most recent month of operations Selling price $ 156 Units in beginning inventory Units produced Units sold Units in ending inventory 9,500 9,100 400 Variable costs per unit: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative expense 29 71 17 21 Fixed costs: Fixed manufacturing overhead Fixed selling and administrative expense $142,500 $ 9,900 What is the net operating income for the month under variable costing?

Explanation / Answer

Total sales = 156 * 9100 = 1419600

Cost of goods sold = Unit sold * (ALl variable expense)

= 9100 * (29 +71 +17 +21) = 1255800

Gross margin = Total sales - Cost of goods sold = 1419600 - 1255800 = 163800

Net operating income = Gross margin - Fixed costs = 163800 - 142500 - 9900 = 11400