Question

Keyser Corporation, which has only one product, has provided the following data concerning its most recent month of operations:Selling price $ 157Units in beginning inventory 1,250Units produced 9,150Units sold 9,250Units in ending inventory 1,150Variable costs per unit:Direct materials $ 35Direct labor $ 52Variable manufacturing overhead $ 16Variable selling and administrative expense $ 26Fixed costs:Fixed manufacturing overhead $ 73,200Fixed selling and administrative expense $ 166,000The company produces the same number of units every month, although the sales in units vary from month to month. The company's variable costs per unit and total fixed costs have been constant from month to month.What is the net operating income for the month under absorption costing

Answer 1

Calculation of Cost of goods sold

Opening Inventory = 1250 units*$111 = $138,750

Production cost = 9150 units*$111 = $1,015,650

Less : Closing Inventory = 1150 units*$111 = $127,650

Cost of Goods sold $1,026,750

Calculation of Unit cost

Direct Materials 35

Direct Labor 52

Variable manufacturing overheads 16

Fixed manufacturing overheads 8

Total Unit Cost 11

Particulars Amount

Sales $1,452,250

Less: Cost of goods sold $1,026,750

Gross Profit $425,500

Less: Selling & admin. exp

Variable -$240,500

Fixed -$166,000 $406,500

Net Operating Income $19,000