Answer:
Farris Corporation
The net operating income for the month under absorption costing is:
= $17,050.
Explanation:
a) Data and Calculations:
Selling price $ 128
Units in beginning inventory 0
Units produced 9,150
Units sold 8,750
Units in ending inventory 400
Variable costs per unit:
Direct materials $ 22
Direct labor $ 64
Variable manufacturing overhead $ 10
Variable selling and administrative expense $ 14
Fixed costs:
Fixed manufacturing overhead $ 137,250
Fixed selling and administrative expense $ 9,200
Direct materials $ 22
Direct labor $ 64
Variable manufacturing overhead $ 10
Variable costs per unit $ 96 * 9,150 = $878,400
Fixed manufacturing overhead $ 137,250
Total production cost $1,015,650
Product cost per unit = $111
Cost of goods sold = $971,250 ($111 * 8,750)
Period costs:
Variable selling and administrative expense $ 14 * 8,750 = $122,500
Fixed selling and administrative expense $ 9,200
Income Statement under absorption costing
Sales revenue ($128 * 8,750) = $1,120,000
Cost of goods sold 971,250
Gross profit $148,750
Period costs:
Variable selling and administrative 122,500
Fixed selling and administrative 9,200
Total period costs $131,700
Net operating income $17,050
