Question

Union Corporation manufactures and sells one product. The following information pertains to the company’s first year of operations: Variable costs per unit: Direct materials $ 82 Fixed costs per year: Direct labor $ 528,000 Fixed manufacturing overhead $ 1,632,000 Fixed selling and administrative expenses $ 646,000 The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 24,000 units and sold 17,000 units. The company’s only product is sold for $232 per unit. The net operating income for the year under super-variable costing is: Multiple Choice $(256,000) $(830,000) $(102,000) $374,000

Answer 1

Correct answer--$(256000)

In Super variable costing only Direct material cost id considered as variable cost and all other cost is taken as a period cost.

Super variable costing Income statement
Sales revenue (17000 x 232)	$ 39,44,000.00
Variable cost
Direct material (17000 x 82)	$ 13,94,000.00
Contribution margin	$ 25,50,000.00
Fixed costs
Direct labor	$    5,28,000.00
Fixed manufacturing cost	$ 16,32,000.00
Fixed selling and administrative cost	$    6,46,000.00
Total fixed cost	$ 28,06,000.00
Net operating income	$ (2,56,000.00)