Mccrone Corporation has provided the following data for its two most recent years of operation: The net operating income (loss)under variable costing in Year 1 is closest to:
A)$380,000
B)$340,000
C)$180,000
D)$172,000

Question

Mccrone Corporation has provided the following data for its two most recent years of operation:   The net operating income (loss)under variable costing in Year 1 is closest to:
A)$380,000 
B)$340,000 
C)$180,000 
D)$172,000

Quizplus · Accepted Answer

Using the variable costing method, we can calculate the net operating income/loss as follows:
Net Operating Income (Year 1) = Sales - Variable Expenses - Fixed Expenses
= $12,000,000 - $9,400,000 - $2,200,000
= -$600,000 (loss)
Net Operating Income (Year 2) = $9,500,000 - $7,600,000 - $2,000,000
= -$100,000 (loss)
Therefore, the net operating loss under variable costing in Year 1 is closest to $172,000 (option D is the closest). Variable costing unit product cost: 11ea7998_5dac_3c35_911b_c327d0de8a4f_TB2627_00_TB2627_00 Variable costing income statement: 11ea7998_5dac_3c36_911b_094769717521_TB2627_00_TB2627_00

Mccrone Corporation Has Provided the Following Data for Its Two