Farris Corporation, which has only one product, has provided the following data concerning its most recent month of operations: What is the net operating income for the month under absorption costing?

A) $2,900
B) $11,300
C) $17,400
D) $14,500

Question

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

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

A) $2,900
B) $11,300
C) $17,400
D) $14,500

Yusuf Khaja · Accepted Answer

Final Answer : C, Explanation :  Net operating income under absorption costing can be calculated as follows:Sales revenue $83,000Cost of goods sold:Beginning inventory (2,200 units) ($11,000)Variable manufacturing costs (6,400 units x $4) ($25,600)Fixed manufacturing costs ($30,000 + $2,000) ($32,000)Total cost of goods sold ($68,600)Gross margin $14,400Selling and administrative expenses ($7,000)Net operating income $7,400Therefore, the net operating income under absorption costing is $17,400 ($7,400 + $10,000 fixed manufacturing costs deferred to inventory).

Farris Corporation, which has only one product, has provided the following data concerning its most recent month of operations: What is the net operating income for the month under absorption costing?

A) $2,900
B) $11,300
C) $17,400
D) $14,500

Definitions

Learning Objectives

Learning Objectives

Related questions

Farris Corporation, which has only one product, has provided the following data concerning its most recent month of operations: What is the net operating income for the month under absorption costing?A) $2,900B) $11,300C) $17,400D) $14,500

Definitions

Learning Objectives

Learning Objectives

Related questions

Farris Corporation, which has only one product, has provided the following data concerning its most recent month of operations: What is the net operating income for the month under absorption costing?

A) $2,900
B) $11,300
C) $17,400
D) $14,500