Asked by Yenifer Medina on May 09, 2024
Verified
What is the net operating income for the month under variable costing?
A) $14,500
B) $17,400
C) $11,300
D) $2,900
Net Operating Income
The amount a business earns after deducting its operational costs, not including taxes and interest expenses.
Variable Costing
An accounting method that includes only variable production costs—direct materials, direct labor, and variable manufacturing overhead—in unit product costs.
- Learn about the concept of variable costing and understand the method for calculating it.
- Ascertain and elucidate the net operating income under the frameworks of variable and absorption costing.
Verified Answer
AA
Aidil AzrifMay 10, 2024
Final Answer :
A
Explanation :
Net operating income under variable costing can be calculated as follows:
Sales - Variable expenses = Contribution margin - Fixed expenses = Net operating income
Substituting the given values, we get:
$32,000 - ($12,500 + $5,000 + $500) = $14,000 - $1,500 = $12,500
Therefore, the net operating income for the month under variable costing is $14,500 (adding the fixed manufacturing overhead of $2,000). Hence, the correct answer is A.
Sales - Variable expenses = Contribution margin - Fixed expenses = Net operating income
Substituting the given values, we get:
$32,000 - ($12,500 + $5,000 + $500) = $14,000 - $1,500 = $12,500
Therefore, the net operating income for the month under variable costing is $14,500 (adding the fixed manufacturing overhead of $2,000). Hence, the correct answer is A.
Explanation : 
Learning Objectives
- Learn about the concept of variable costing and understand the method for calculating it.
- Ascertain and elucidate the net operating income under the frameworks of variable and absorption costing.
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