Keyser Corporation, which has only one product, has provided the following data concerning its most recent month of operations:
|Units in beginning inventory||550|
|Units in ending inventory||450|
|Variable costs per unit:|
|Variable manufacturing overhead||$||2|
|Variable selling and administrative expense||$||12|
|Fixed manufacturing overhead||$||67,600|
|Fixed selling and administrative expense||$||161,800|
The company produces the same number of units every month, although the sales in units vary from month to month. The company's variable costs per unit and total fixed costs have been constant from month to month.
What is the net operating income for the month under absorption costing?
Calculation of Fixed Manufacturing Overhead
Fixed Manufacturing overhead rate = Fixed Manufacturing Overhead / Units Produced
= $67,600 / 8,450 Unit
Fixed Manufacturing Overhead = No. of Units Sold * Fixed Manufacturing Overhead rate
= 8,550 Units * $8
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