Leeds Electronics, which has only one product, has provided the following data concerning its most recent month of operations:
-The market price for direct materials was lower last month. The normal cost of direct materials is £26.
What is the net operating income for the month under variable costing if the cost of direct material is £26?

A)£(8,700)
B)£(5,700)
C)£14,400
D)(£9,000)

Question

Leeds Electronics, which has only one product, has provided the following data concerning its most recent month of operations:
-The market price for direct materials was lower last month. The normal cost of direct materials is £26.
What is the net operating income for the month under variable costing if the cost of direct material is £26?

A)£(8,700) 
B)£(5,700) 
C)£14,400 
D)(£9,000)

Quizplus · Accepted Answer

The net operating income for the month under variable costing is £(8,700) because the cost of direct material is lower than the normal cost.

Leeds Electronics, Which Has Only One Product, Has Provided the Following