Paparelli Corporation manufactures and sells one product. The following informat
ID: 342028 • Letter: P
Question
Paparelli Corporation manufactures and sells one product. The following information pertains to the company’s first year of operations:
The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 40,000 units and sold 33,000 units. The company’s only product is sold for $240 per unit.
The net operating income for the year under super-variable costing is:
Multiple Choice
$308,000
$(252,000)
$924,000
$448,000
Variable costs per unit: Direct materials $ 80 Fixed costs per year: Direct labor $ 800,000 Fixed manufacturing overhead $ 2,720,000 Fixed selling and administrative expenses $ 1,452,000Explanation / Answer
Sales (33000*240)= 7920000 less Variable expense (33000*80)= 2640000 Contribution margin 5280000 less fixed expenses Direct labor 800,000 Fixed manufacturing overhead 2,720,000 Fixed selling & administrative expense 1,452,000 4,972,000 Net operating income 308,000 Answer $308,000
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