Assume that the company uses a variable costing system that assigns $18 of direct labor cost to each unit that is produced. The net operating income under this costing system is:
A)$78,000
B)$405,000
C)$351,000
D)$594,000

Question

Quizplus · Accepted Answer

Net operating income using variable costing can be calculated as:

Sales - Variable expenses (direct materials, direct labor, variable overhead) - Fixed expenses = Net operating income

Substituting the given values, we get:

$1,200,000 - ($300,000 + $540,000 + $270,000 + ($9 per unit x 60,000 units)) - $45,000 = $405,000

Therefore, the net operating income under this costing system is $405,000.

Assume That the Company Uses a Variable Costing System That