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

Question

Keyser Corporation, which has only one product, has provided the following data concerning its most recent month of operations Selling price Units in beginning inventory Units produced Units sold Units in ending inventory 1,500 9,400 9,500 1,400 Variable costs per unit: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative expense 40 57 21 31 Fixed costs: Fixed manufacturing overhead Fixed selling and administrative expense $ 75,200 $167,500 The company produces the same number of units every month, although the sales in units vary from month to month. The company's variable costs per unit and total fixed costs have been constant from month to month What is the net operating income for the month under absorption costing?

Explanation / Answer

Answer is $ 22,500

The explanation is as follows:

Goods produced 9400 units COST Variable manufacturing cost (9400 units@118) 1109200 Fixed manufacturing cost 75200 Total cost of manufacture (for 9400 units @ 126 per unit) 1184400 Add: Opening stock of 1500 units@126 189000 (Valued at same costing as production schedule and costing is same) Less: Closing stock of 1400 units@126 176400 Cost of goods sold 1197000 Add: Selling and Admin Expense Variable(9500 units @31) 294500 Fixed 167500 Total cost of sales 1659000 Sales (9500 unts @177) 1681500 Net Operating income 22500

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