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Farris Corporation, which has only one product, has provided the following data concerning its most recent month of operations: Selling price $ 168 Units in beginning inventory 0 Units produced 9,650 Units sold 9,250 Units in ending inventory 400 Variable costs per unit: Direct materials $ 32 Direct labor $ 74 Variable manufacturing overhead $ 20 Variable selling and administrative expense $ 24 Fixed costs: Fixed manufacturing overhead $ 144,750 Fixed selling and administrative expense $ 10,200 What is the net operating income (loss) for the month under variable costing

Answer :

Answer:

The net operating income for the month under variable costing is $11,550

Explanation:

In order to calculate The net operating income for the month under variable costing for Farron Corporation we would have to make the following calculations:

According to the given data:

i) Direct Material=$32  

ii) Direct labor=$74  

iii) Variable manufacturing overhead= $20  

Hence, Variable costing unit product cost (i + ii + iii)=  $126  

A) Sales ($168 per unit * 9250 units sold)=$1,554,000

B) Less variable expenses:  

Variable cost of goods sold  

($126 per unit * 9250 units sold)=$1,165,500  

Variable selling and administrative  

($24 per unit × 9250 units) $222,000 $1,387,500

C) Contribution margin (A – B)=$166,500

D) Less : fixed expenses  

Fixed manufacturing overhead= $144,750  

Fixed selling and administrative $10,200 $154,950

E) Net operating Income ( C-D)=$11,550

The net operating income for the month under variable costing is $11,550

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