Answer:
The correct answer is C.
Explanation:
<u>The variable costing method incorporates all variable production costs (direct material, direct labor, and variable overhead).</u>
We need to calculate the net operating income:
Sales= 120,000*40= 4,800,000
Total variable cost= (20 + 10)*120,000= (3,600,000)
Total contribution margin= 1,200,000
Fixed manufacturing costs= (600,000)
Fixed operating (nonmanufacturing) costs= (400,000)
Net operating income= 200,000
