Abe Company, which has only one product, has provided the following data concerning its most recent month of operations:
-What is the net operating income for the month under variable costing?
A)$11,400
B)$16,800
C)$5,400
D)$(12,900)

Question

Abe Company, which has only one product, has provided the following data concerning its most recent month of operations: 
-What is the net operating income for the month under variable costing?
A)$11,400 
B)$16,800 
C)$5,400 
D)$(12,900)

Quizplus · Accepted Answer

Variable costing considers only variable costs in determining net operating income. In this case, the only variable cost is cost of goods sold, which is $5,400. Therefore, the net operating income under variable costing is $16,800 - $5,400 = $11,400.

Abe Company, Which Has Only One Product, Has Provided the Following