Question

fixed expenses: manufacturing 141,600 selling and administrative 70,800 total fixed expenses 212,400 net operating income $ 42,000 during november, 35,400 units were manufactured and 8,020 units were in beginning inventory. variable production costs per unit, total fixed manufacturing expenses, and the number of units produced were the same in prior months. under absorption costing, for november the company would report a:

Answer 1

Absorption costing is an accounting method that includes both variable and fixed manufacturing costs in unit product costs. For a given financial period with certain production and inventory figures, these costs must be used to calculate cost of goods sold and the company's income.

Step-by-step explanation:

The question pertains to the concept of absorption costing which is a method in accounting that includes both variable and fixed manufacturing costs in the per-unit product costs. It is clear from the question that the student is required to consider the fixed and variable costs in calculating the required financial figure for November.

In absorption costing, fixed manufacturing expenses are allocated to each unit produced, which means that even though the number of produced units might differ, the per-unit fixed manufacturing cost will remain constant as long as the total fixed expenses and the production volume remain the same compared to previous months.

The provided data indicates that the total fixed expenses for manufacturing and selling/administrative purposes for the period were $212,400, and the company had a net operating income of $42,000. Considering that the company produced 35,400 units in November and had 8,020 units in beginning inventory, these figures must be taken into account to determine the cost of goods sold and, subsequently, the company's income for the month under the absorption costing method.