Favini Company, 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)$11,800
B)$3,700
C)$8,100
D)$(23,600)

Question

Favini Company, 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)$11,800 
B)$3,700 
C)$8,100 
D)$(23,600)

Quizplus · Accepted Answer

Under absorption costing, fixed manufacturing overhead is included in the cost of goods sold, which can result in a higher net operating income compared to variable costing. $11,800 is the correct net operating income under absorption costing.

Favini Company, Which Has Only One Product, Has Provided the Following