Answer:
The net operating income for the month under variable costing is $11,550
Explanation:
In order to calculate The net operating income for the month under variable costing for Farron Corporation we would have to make the following calculations:
According to the given data:
i) Direct Material=$32
ii) Direct labor=$74
iii) Variable manufacturing overhead= $20
Hence, Variable costing unit product cost (i + ii + iii)= $126
A) Sales ($168 per unit * 9250 units sold)=$1,554,000
B) Less variable expenses:
Variable cost of goods sold
($126 per unit * 9250 units sold)=$1,165,500
Variable selling and administrative
($24 per unit × 9250 units) $222,000 $1,387,500
C) Contribution margin (A – B)=$166,500
D) Less : fixed expenses
Fixed manufacturing overhead= $144,750
Fixed selling and administrative $10,200 $154,950
E) Net operating Income ( C-D)=$11,550
The net operating income for the month under variable costing is $11,550
