Xenna Company manufactures coffee tables. The following data is related to sales and production of the tables for last year.

-Using absorption costing, what is operating income at Xenna Company for last month?
A) $1,060,200
B) $1,096,200
C) $1,206,000
D) $1,242,000

Question

Xenna Company manufactures coffee tables. The following data is related to sales and production of the tables for last year.
 
-Using absorption costing, what is operating income at Xenna Company for last month?
A) $1,060,200 
B) $1,096,200 
C) $1,206,000 
D) $1,242,000

Quizplus · Accepted Answer

Absorption costing includes fixed manufacturing costs as product costs. So, the $140,000 of fixed manufacturing costs is included in the $1,206,000 cost of goods sold. Operating income is sales revenue minus cost of goods sold and operating expenses. So, operating income is $1,242,000 - $1,206,000 = $36,000.

Xenna Company Manufactures Coffee Tables