Question

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

Selling price	$	156
Units in beginning inventory		0
Units produced		9,500
Units sold		9,100
Units in ending inventory		400

Variable costs per unit:
Direct materials	$	29
Direct labor	$	71
Variable manufacturing overhead	$	17
Variable selling and administrative expense	$	21
Fixed costs:
Fixed manufacturing overhead	$	142,500
Fixed selling and administrative expense	$	9,900

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

Answer 1

unit product cost under Absorption costing
direct materials					29
direct labor					71
variable manufacturing overhead					17
fixed manufacturing overhead d			(142,500/9,500)		15
unit product cost					132
Sales		(9,100*156)			1419600
less:Variable cost of good sold (9,100*132)					1201200
Gross profit					218400
Selling and administrative expense
variable selling expens (9,100*21)				191100
Fixed selling & adm expense				9,900	201,000
Net operating income					17,400	answer