Asked by Jacob Murphree on May 09, 2024
Verified
What was the absorption costing net operating income this year?
A) $81,000
B) $83,000
C) $115,000
D) $123,000
Absorption Costing
An accounting method that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed manufacturing overhead - in the cost of a unit of product.
Net Operating Income
Represents the difference between operating revenues and operating expenses.
- Discern the disparities between absorption costing and variable costing, as well as their impact on operating income.
Verified Answer
AJ
Abrahim JawadMay 11, 2024
Final Answer :
C
Explanation :
The absorption costing net operating income can be calculated as follows:
Sales - Cost of goods sold (including fixed manufacturing overhead) - Selling and administrative expenses = Net operating income
$1,000,000 - ($300,000 + $400,000) - $185,000 = $115,000. Therefore, the answer is C, $115,000.
Sales - Cost of goods sold (including fixed manufacturing overhead) - Selling and administrative expenses = Net operating income
$1,000,000 - ($300,000 + $400,000) - $185,000 = $115,000. Therefore, the answer is C, $115,000.
Explanation :
Reference: CHO7-Ref37
Norenberg Corporation manufactures a single product.The following data pertain to the company's operations over the last two years:
Norenberg Corporation manufactures a single product.The following data pertain to the company's operations over the last two years:
Learning Objectives
- Discern the disparities between absorption costing and variable costing, as well as their impact on operating income.
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