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 variable costing?

A)£5,800
B)£25,700
C)£21,400
D)(£18,000)

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 variable costing?

A)£5,800 
B)£25,700 
C)£21,400 
D)(£18,000)

Quizplus · Accepted Answer

Variable costing only includes variable costs in the calculation of net operating income. In this case, the only variable cost is the cost of goods sold, which is £17,900. The net operating income is therefore £25,700 - £17,900 = £5,800.

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