Leeds Electronics, which has only one product, has provided the following data concerning its most recent month of operations:
-The management accountant has discovered an error in last month's accounts. The fixed manufacturing overhead should have been stated at £230,000.
What is the net operating income for the month under absorption costing if the fixed manufacturing overhead is £230,000?

A)£31,333
B)£23,333
C)£18,500
D)(£0)

Question

Leeds Electronics, which has only one product, has provided the following data concerning its most recent month of operations:
-The management accountant has discovered an error in last month's accounts. The fixed manufacturing overhead should have been stated at £230,000.
What is the net operating income for the month under absorption costing if the fixed manufacturing overhead is £230,000?

A)£31,333 
B)£23,333 
C)£18,500 
D)(£0)

Quizplus · Accepted Answer

The net operating income for the month under absorption costing if the fixed manufacturing overhead is £230,000 is £31,333. This is because the fixed manufacturing overhead is added to the cost of goods sold under absorption costing, which increases the cost of goods sold and reduces the net operating income.

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