Farris Corporation, which has only one product, has provided the following data
ID: 2561676 • Letter: F
Question
Farris Corporation, which has only one product, has provided the following data concerning its most recent month of operations Selling price $ 112 Units in beginning inventory Units produced Units sold Units in ending inventory 8,950 8,550 400 Variable costs per unit: 18 60 Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative expense 10 Fixed costs: Fixed manufacturing overhead Fixed selling and administrative expense $134,250 $ 8,800 What is the net operating income for the month under absorption costing?Explanation / Answer
Answer is $ 16,850
The explanation is as follows:
Goods produced: 8950 units:
Total cost of goods produced:
Variable manufacturing cost (8950 units@84) = $ 751,800
Add: Fixed manufacturing cost $ 134,250
Total manufacturing cost for 8950 units $ 886,050 (i.e. $ 99 per unit)
Less: Closing stock of 400 units@99 $ 39,600
Cost of goods sold $ 846,450
Add: Selling Admin expense
Variable(8550 unts @10) $ 85,500
Fixed $ 8,800
Total cost of sales $ 940,750
Sales (8550 units @ 112) $ 957,600
Net operating income $ 16,850
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