Enz Corporation manufactures a variety of products. The following data pertain to the company's operations over the last two years:
-What was the absorption costing net operating income this year?
A)$92,000
B)$56,000
C)$73,000
D)$75,000

Question

Enz Corporation manufactures a variety of products. The following data pertain to the company's operations over the last two years: 
-What was the absorption costing net operating income this year?
A)$92,000 
B)$56,000 
C)$73,000 
D)$75,000

Quizplus · Accepted Answer

The absorption costing net operating income is calculated as follows: Sales - Cost of goods sold - Selling and administrative expenses - Fixed manufacturing overhead = Net operating income. From the information given in the problem, we know that sales were $400,000, cost of goods sold was $150,000, selling and administrative expenses were $120,000, and fixed manufacturing overhead was $38,000. Therefore, net operating income is $92,000 ($400,000 - $150,000 - $120,000 - $38,000 = $92,000).

Enz Corporation Manufactures a Variety of Products