Souffront Corporation manufactures and sells one product. In the company's first year of operations, the variable cost consisted solely of direct materials of $97 per unit. The annual fixed costs were $1,416,000 of direct labor cost, $3,776,000 of fixed manufacturing overhead expense, and $1,650,000 of fixed selling and administrative expense. The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 59,000 units and sold 55,000 units. The company's only product is sold for $251 per unit. The net operating income for the year under super-variable costing is:
A) $1,628,000
B) $1,724,000
C) $1,240,000
D) $1,980,000

Question

Quizplus · Accepted Answer

The correct answer is A because the net operating income for the year under super-variable costing is $1,628,000. This is calculated by subtracting the variable costs from the sales revenue and then subtracting the fixed costs.

Souffront Corporation Manufactures and Sells One Product