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Farris Corporation, which has only one product, has provided the following data concerning its most recent month of operations: Selling price $ 78 Units in beginning inventory 0 Units produced 8,800 Units sold 8,700 Units in ending inventory 100 Variable costs per unit: Direct materials $ 18 Direct labor $ 10 Variable manufacturing overhead $ 4 Variable selling and administrative expense $ 5 Fixed costs: Fixed manufacturing overhead $ 255,200 Fixed selling and administrative expense $ 87,000 What is the net operating income for the month under variable costing

Respuesta :

The net operating income as per the variable costing method is $14500

Explanation:

The unit product cost is = $18 + $10 + $4 = $32

Sales revenue ( $78 multiply with 8700 units) = $678600

Variable cost:

Variable cost of goods sold ( 8700 units multiply $32) = $278400

Variable selling and administartive (8700 units multiply $5) = $43500

contribution margin = $356700

fixed manufacturing overhead = $255200

Fixed selling and adminstrative expenses = $87000

Net operating income = $14500

Note: contribution margin is calculated after deducting sales revenue with variable cost

Tundexi

The net operating income as per the variable costing method is $14500.

What is unit product cost?

= $18 + $10 + $4

= $32

Particulars                                                           Amount

Sales revenue ($78 * 8700 units)                     $678600

Variable cost:

Variable cost of goods sold(8700 units *$32)  $278400

Variable selling (8700 *$5) =                              $43500

Contribution margin                                           $356700

Fixed manufacturing overhead                          $255200

Fixed selling and adminstrative expenses        $87000

Net operating income                                         $14500

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