Question

Farris Corporation, which has only one product, has provided the following data concerning its most recent month of operations:

Selling price	$	172
Units in beginning inventory		0
Units produced		9,700
Units sold		9,300
Units in ending inventory		400

Variable costs per unit:
Direct materials	$	33
Direct labor	$	75
Variable manufacturing overhead	$	21
Variable selling and administrative expense	$	25
Fixed costs:
Fixed manufacturing overhead	$	145,500
Fixed selling and administrative expense	$	10,300

What is the net operating income for the month under absorption costing?

Answer 1

income statement under absorption costing
			Amt	Amt
Sales	172*9300			1599600
Direct materials	9300*33		306900
Direct labor	9300*75		697500
Variable manufacturing overhead	9300*21		195300
Fixed manufacturing overhead			145,500
Cost of goods sold				1345200
Gross margin				254400
Variable selling and administrative expense	9300*25		232500
Fixed selling and administrative expense			10,300
Total seeling and admin cost				242,800
Net income				11,600