Question

Farris Corporation, which has only one product, has provided the following data concerning its most recent...

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

Selling price $108
Units in beginning inventory 0
Units produced 8,900
Units sold 8,500
Units in ending inventory 400
Variable costs per unit:
Direct materials $ 17
Direct labor $ 59
Variable manufacturing overhead $ 5
Variable selling and administrative expense $ 9
Fixed costs:
Fixed manufacturing overhead $133,500
Fixed selling and administrative expense $ 8,700

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

Homework Answers

Answer #1

(1)

Inventory Consumed=Opening Inventory+Produced-Closing Inventory=0+8900-400=8500

(2)

Total Product Cost =Direct Material + Direct Labour + Variable Manufacturing Overheads+Fixed Manufacturing Overheads

=(8500*17)+(8500*59)+(8500*5)+133500

=$822,000

(3)

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