Question

Mayhew Company reports the following information for September: Net Sales Revenue $52,500 Variable Cost of Goods Sold 18,900 Fixed Cost of Goods Sold 10,000 Variable Selling and Administrative Costs 12,300 Fixed Selling and Administrative Costs 6,600 Calculate the operating income for Mayhew Company using absorption costing.

Answer 1

Answer: $4700

Step-by-step explanation:

Given that,

Net Sales Revenue = $52,500

Variable Cost of Goods Sold = 18,900

Fixed Cost of Goods Sold = 10,000

Variable Selling and Administrative Costs = 12,300

Fixed Selling and Administrative Costs = 6,600

Cost of goods sold = Variable Cost of Goods Sold + Fixed Cost of Goods Sold

= 18900 + 10000

= $28900

Selling and Administrative costs = Variable Selling and Administrative Costs + Fixed Selling and Administrative Costs

= 12,300 + 6,600

= $18900

Therefore,

Operating income under absorption costing = sales revenue - Cost of goods sold - Selling and Administrative costs

= 52500 - 28900 - 18900

= $4700