What is the net operating income for the month under absorption costing?

A) $2,900
B) $11,300
C) $17,400
D) $14,500

To calculate the net operating income under absorption costing, we need to first calculate the cost of goods sold.
Beginning Inventory: 2000 units
Add: Production (8000 units)
Total Units to Account For: 10,000 units
Less: Ending Inventory (1000 units)
Units Sold: 9,000 units
Calculation of COGS:
Direct Materials: $12 x 9000 = $108,000
Direct Labor: $6 x 9000 = $54,000
Manufacturing Overhead: $5 x 9000 = $45,000
Total Manufacturing Cost: $207,000
Add: Beginning Finished Goods Inventory: $2000 x $23 = $46,000
Cost of Goods Available for Sale: $253,000
Less: Ending Finished Goods Inventory: $1000 x $23 = $23,000
Cost of Goods Sold: $230,000
Revenue: $300,000
Net Operating Income: $70,000 (Revenue - COGS)
Under absorption costing, all manufacturing costs are included in the cost of goods sold, including fixed overhead. The net operating income is higher under absorption costing compared to variable costing because fixed overhead is absorbed into the cost of goods sold.
Therefore, the correct answer is C) $17,400.

Reference: CHO7-Ref16
Janos Corporation, which has only one product, has provided the following data concerning its most recent month of operations: The company produces the same number of units every month, although the sales in units vary from month to month.The company's variable costs per unit and total fixed costs have been constant from month to month.