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Krepps Corporation produces a single product. Last year, Krepps manufactured 29,010 units and sold 23,900 units. Production costs for the year were as follows: Direct

Krepps Corporation produces a single product. Last year, Krepps manufactured 29,010 units and sold 23,900 units. Production costs for the year were as follows:

Direct materials $ 214,674
Direct labor $ 121,842
Variable manufacturing overhead $ 243,684
Fixed manufacturing overhead $ 319,110

Sales totaled $1,159,150 for the year, variable selling and administrative expenses totaled $126,670, and fixed selling and administrative expenses totaled $205,971. There was no beginning inventory. Assume that direct labor is a variable cost.

Under variable costing, the company's net operating income for the year would be:

Multiple Choice

  • $30,149 lower than under absorption costing.

  • $30,149 higher than under absorption costing.

  • $56,210 lower than under absorption costing.

  • $56,210 higher than under absorption costing.

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