Farris Corporation, which has only one product, has provided the following data
ID: 2561685 • Letter: F
Question
Farris Corporation, which has only one product, has provided the following data concerning its most recent month of operations Selling price $ 156 Units in beginning inventory Units produced Units sold Units in ending inventory 9,500 9,100 400 Variable costs per unit: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative expense 29 71 17 21 Fixed costs: Fixed manufacturing overhead Fixed selling and administrative expense $142,500 $ 9,900 What is the net operating income for the month under variable costing?Explanation / Answer
Total sales = 156 * 9100 = 1419600
Cost of goods sold = Unit sold * (ALl variable expense)
= 9100 * (29 +71 +17 +21) = 1255800
Gross margin = Total sales - Cost of goods sold = 1419600 - 1255800 = 163800
Net operating income = Gross margin - Fixed costs = 163800 - 142500 - 9900 = 11400
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