Kilihea Corporation produces a single product. The company's absorption costing income statement for July follows: The company's variable production costs are $20 per unit and its fixed manufacturing overhead totals $80,000 per month.
-Net operating income under the variable costing method for July would be:
A)$53,000
B)$49,800
C)$61,000
D)$57,000

Question

Kilihea Corporation produces a single product. The company's absorption costing income statement for July follows: The company's variable production costs are $20 per unit and its fixed manufacturing overhead totals $80,000 per month.
-Net operating income under the variable costing method for July would be:
A)$53,000 
B)$49,800 
C)$61,000 
D)$57,000

Quizplus · Accepted Answer

Net operating income under the variable costing method is calculated by deducting variable costs from sales revenue. In this case, sales revenue is $100,000 and variable costs are $47,000, so net operating income is $100,000 - $47,000 = $53,000.

Kilihea Corporation Produces a Single Product