Wasilko Corporation produces and sells one product The budgeted selling price pe
ID: 2553039 • Letter: W
Question
Wasilko Corporation produces and sells one product
The budgeted selling price per unit is $114. Budgeted unit sales for February is 9,900 units.
Each unit of finished goods requires 6 pounds of raw materials. The raw materials cost $4.00 per pound.
The direct labor wage rate is $24.00 per hour. Each unit of finished goods requires 2.4 direct labor-hours.
Manufacturing overhead is entirely variable and is $9.00 per direct labor-hour.
The variable selling and administrative expense per unit sold is $1.60. The fixed selling and administrative expense per month is $70,000.
The estimated net operating income (loss) for February is closest to:
Multiple Choice
$50,000
$91,080
$21,080
$36,920
Explanation / Answer
Calculation of net operating income for 9,900 units
Particulars
Per unit
Total
Sales
$114
$1,128,600
Less: Variable expenses:
Raw material cost (6 pounds*$4)
$24
$237,600
Direct labour cost (2.4 hours*$24)
$58
$570,240
Manufacturing overheads (2.4 hours*$9)
$22
$213,840
Variable selling and admin expenses
$2
$15,840
Contribution margin
$9
$91,080
Less: Fixed Selling and admin exp
$70,000
Net operating income
$21,080
Ans
Net operating income = 21,080 (Option (C) is correct
Calculation of net operating income for 9,900 units
Particulars
Per unit
Total
Sales
$114
$1,128,600
Less: Variable expenses:
Raw material cost (6 pounds*$4)
$24
$237,600
Direct labour cost (2.4 hours*$24)
$58
$570,240
Manufacturing overheads (2.4 hours*$9)
$22
$213,840
Variable selling and admin expenses
$2
$15,840
Contribution margin
$9
$91,080
Less: Fixed Selling and admin exp
$70,000
Net operating income
$21,080
Ans
Net operating income = 21,080 (Option (C) is correct
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