Loring Company had the following data for the month:
Fixed overhead is $4,000 per month; it is applied to production based on normal activity of 2,000 units. During the month, 2,000 units were produced. Loring started the month with 300 units in beginning inventory, with unit product cost equal to this month's unit product cost. A total of 2,100 units were sold during the month at price of $14. Selling and administrative expense for the month, all fixed, totaled $3,600.
-Refer to Figure 8-2. What is operating income under variable costing?
A) $3,540
B) $7,980
C) $11,340
D) -$540
E) $3,740

Question

Loring Company had the following data for the month:
  Fixed overhead is $4,000 per month; it is applied to production based on normal activity of 2,000 units. During the month, 2,000 units were produced. Loring started the month with 300 units in beginning inventory, with unit product cost equal to this month's unit product cost. A total of 2,100 units were sold during the month at price of $14. Selling and administrative expense for the month, all fixed, totaled $3,600.
-Refer to Figure 8-2. What is operating income under variable costing?
A) $3,540 
B) $7,980 
C) $11,340 
D) -$540 
E) $3,740

Quizplus · Accepted Answer

Operating income under variable costing is calculated by subtracting variable costs and fixed costs from sales. Without the specific details from Figure 8-2, the correct answer cannot be determined through calculation. However, based on the provided options, E) $3,740 is identified as the correct answer.

Loring Company Had the Following Data for the Month