Mandato Corporation has provided the following data for its two most recent year

Question

Mandato Corporation has provided the following data for its two most recent years of operation:

The net operating income (loss) under absorption costing in Year 1 is closest to:

$126,000

$96,000

$26,000

$2,000

Selling price per unit $ 50 Manufacturing costs: Variable manufacturing cost per unit produced: Direct materials $ 10 Direct labor $ 6 Variable manufacturing overhead $ 5 Fixed manufacturing overhead per year $ 72,000 Selling and administrative expenses: Variable selling and administrative expense per unit sold $ 5 Fixed selling and administrative expense per year $ 70,000

Explanation / Answer

The net operating income (loss) under absorption costing in Year 1 is closest to:

so answer is c) $26000

Sales 300000 Less: Cost of goods sold (6000*29) (174000) Gross profit 126000 Less: Selling and administrative exp Variable (6000*5) (30000) Fixed (70000) (100000) Net operating income 26000

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