Asked by Abigail Martinez on Jul 01, 2024
Verified
What is the net operating income for the month under absorption costing?
A) $7,000
B) $4,600
C) $11,600
D) $24,200
Net Operating Income
A measure of a company's profitability from its core business operations, excluding deductions of interest and taxes.
Absorption Costing
A costing method that includes all manufacturing costs - both fixed and variable - in the cost of a product.
- Digest the concept of absorption costing along with the calculation mechanism.
- Assess and clarify the net operating income with the use of variable and absorption costing strategies.
Verified Answer
ZK
Zybrea KnightJul 06, 2024
Final Answer :
B
Explanation :
Under absorption costing, fixed manufacturing overhead costs are included in the cost of goods sold. Therefore, net operating income is calculated as follows:
Sales - Cost of goods sold (which includes fixed manufacturing overhead) - Selling and administrative expenses = Net operating income
$30,000 - $15,000 - $10,400 = $4,600.
The correct answer is B.
Sales - Cost of goods sold (which includes fixed manufacturing overhead) - Selling and administrative expenses = Net operating income
$30,000 - $15,000 - $10,400 = $4,600.
The correct answer is B.
Explanation :
Unit product cost under absorption costing: 
Reference: CHO7-Ref18
Wolanski Corporation has provided the following data for its most recent year of operations:
Reference: CHO7-Ref18Wolanski Corporation has provided the following data for its most recent year of operations:
Learning Objectives
- Digest the concept of absorption costing along with the calculation mechanism.
- Assess and clarify the net operating income with the use of variable and absorption costing strategies.