A manufacturing company that produces a single product has provided the following data concerning its most recent month of operations: What is the net operating income for the month under variable costing?
A)$15,000
B)$12,100
C)$2,900
D)$5,300

Question

A manufacturing company that produces a single product has provided the following data concerning its most recent month of operations:  What is the net operating income for the month under variable costing?
A)$15,000 
B)$12,100 
C)$2,900 
D)$5,300

Quizplus · Accepted Answer

Under variable costing, the net operating income is calculated as (Total Sales - Total Variable Expenses - Total Fixed Expenses). Using the given data:
Total Sales = 6,500 units x $20 per unit = $130,000
Total Variable Expenses = 6,500 units x $8 per unit = $52,000
Total Fixed Expenses = $70,000
Net Operating Income = $130,000 - $52,000 - $70,900 = $12,100. Therefore, the correct answer is B.

A Manufacturing Company That Produces a Single Product Has Provided