Assume that the company uses an absorption costing system that assigns $19 of direct labor cost and $50 of fixed manufacturing overhead to each unit that is produced. The net operating income under this costing system is:
A)$882,000
B)$399,000
C)$(210,000)
D)$532,000

Question

Quizplus · Accepted Answer

The net operating income under this costing system is $882,000. This is calculated by subtracting the total cost of goods sold ($1,061,000) from the total revenue ($1,943,000). The total cost of goods sold is calculated by adding the direct labor cost ($19 per unit), the fixed manufacturing overhead ($50 per unit), and the variable manufacturing overhead ($10 per unit) for each unit produced (10,000 units).

Assume That the Company Uses an Absorption Costing System That