Asked by
Wendy Dacillo
on Oct 11, 2024
Verified
Pungent Corporation manufactures and sells a spice rack.Shown below are the actual operating results for the first two years of operations: 
Pungent's selling price and unit variable cost and total fixed cost were the same for both years.What is Pungent's variable costing net operating income for Year 2?
A) $48,000
B) $50,000
C) $54,000
D) $56,000
Variable Costing
An approach in accounting where only direct materials, direct labor, and variable manufacturing overhead costs are considered in calculating the cost of products.
Net Operating Income
The total profit of a company after operating expenses are deducted, but before interests and taxes are subtracted.
Fixed Cost
Costs that do not change with the level of production or sales activity, such as rent or salaries.
- Ascertain the net operating income by employing absorption and variable costing methodologies.
- Analyze the impact of selling price, variable cost, and fixed costs on net operating income.
Verified Answer
BC
Learning Objectives
- Ascertain the net operating income by employing absorption and variable costing methodologies.
- Analyze the impact of selling price, variable cost, and fixed costs on net operating income.