Assume that the company uses a variable costing system that assigns $19 of direct labor cost to each unit that is produced. The net operating income under this costing system is:
A)$532,000
B)$399,000
C)$(210,000)
D)$882,000

Question

Quizplus · Accepted Answer

The net operating income under a variable costing system is calculated by deducting variable costs from sales revenue. In this case, the variable cost per unit is $19, and the company produced 22,000 units. Therefore, the total variable cost is $418,000 (19 x 22,000). The sales revenue is $1,010,000 (50 x 22,000). Therefore, the net operating income is $592,000 ($1,010,000 - $418,000).

Assume That the Company Uses a Variable Costing System That