Norfolk Engineering, which has only one product, has provided the following data concerning its most recent month of operations:
-What is the net operating income for the month under absorption costing?

A)£10,200
B)£5,700
C)£14,400
D)(£10,000)

Question

Norfolk Engineering, which has only one product, has provided the following data concerning its most recent month of operations:
-What is the net operating income for the month under absorption costing?

A)£10,200 
B)£5,700 
C)£14,400 
D)(£10,000)

Quizplus · Accepted Answer

Net operating income under absorption costing is calculated as sales revenue minus cost of goods sold and operating expenses. In this case, sales revenue is £20,000, cost of goods sold is £9,800, and operating expenses are £4,500. Therefore, net operating income is £20,000 - £9,800 - £4,500 = £5,700.

Norfolk Engineering, Which Has Only One Product, Has Provided the Following