Question

Wasilko Corporation produces and sells one product. a.The budgeted selling price per unit is $114.Budgeted unit sales for February is 9,900 units.
B.Each unit of finished goods requires 6 pounds of raw materials.The raw materials cost $4.00 per pound.
C.The direct labor wage rate is $24.00 per hour.Each unit of finished goods requires 2.4 direct labor-hours.
D.Manufacturing overhead is entirely variable and is $9.00 per direct labor-hour.
E.The variable selling and administrative expense per unit sold is $1.60.The fixed selling and administrative expense per month is $70,000.
The estimated net operating income (loss)for February is closest to:__________
A) $50,000
B) $91,080
C) $21,080
D) $36,920

Answer 1

Answer:

C) $21,080

Explanation:

The computation of the net operating income is given below:

Particulars                                          Per unit               Total

Sales                                                  $114                   $1,128,600

Less: Variable expenses:

Raw material cost (6 pounds for $4)  $24              $237,600

Direct labor cost (2.4 hours for $24)  $58             $570,240

Manufacturing overheads (2.4 hours for $9)  $22  $213,840

Variable selling and admin expenses  $2              $15,840

Contribution margin              $9                           $91,080

Less: Fixed Selling and admin exp                  $70,000

Net operating income                                     $21,080