Question

"What is the net operating income (loss) for the month under variable costing?" Farris Corporation, which has only one product, has provided the following data concerning its most recent month of operations:elling price $ 108

Units in beginning inventory 0
Units produced 8,900
Units sold 8,500
Units in ending inventory 400
Variable costs per unit:
Direct materials $ 17
Direct labor $ 59
Variable manufacturing overhead $ 5
Variable selling and administrative expense $ 9
Fixed costs:
Fixed manufacturing overhead $ 133,500
Fixed selling and administrative expense $ 8,700
What is the net operating income (loss) for the month under variable costing?

Answer 1

Net operating income = $10,800

Step-by-step explanation:

Farris Corporation

Income statement (Variable costing method)

For the year ended, December 31, 20XX

Sales ($108 × 8,500 units) = $918,000

Less: Variable expenses

Direct materials ($17 × 8,500 units) = $144,500

Direct labor ($59 × 8,500 units) = $501,500

Variable manufacturing overhead ($5 × 8,500 units) = $ 42,500

Variable selling & administrative expense ($9×8,500 units)= $76,500

Total variable expense = $765,000

Contribution Margin $153,000

Less: Fixed expenses

Fixed manufacturing overhead $ 133,500

Fixed selling and administrative expense $ 8,700

Total fixed expenses $142,200

Net operating Income (loss) $10,800