Question

Aaron Corporation, which has only one product, has provided the following data concerning its most recent month of operations: Selling price $ 90 Units in beginning inventory 0 Units produced 3,400 Units sold 3,000 Units in ending inventory 400 Variable costs per unit: Direct materials $ 21 Direct labor $ 38 Variable manufacturing overhead $ 6 Variable selling and administrative expense $ 4 Fixed costs: Fixed manufacturing overhead $ 54,400 Fixed selling and administrative expense $ 3,000 What is the net operating income for the month under variable costing?

12,000

(20,400)

5600

6400

Answer 1

Calculate net operating income

Sales (3000*90)	270000
Variable cost of goods sold (3000*65)	195000
Variable selling and administrative	12000
Fixed manufacturing overhead	54400
Fixed selling and administrative	3000
Operating income	5600

So answer is c) $5600