Question
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
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$30,149 lower than under absorption costing.
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$30,149 higher than under absorption costing.
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$56,210 lower than under absorption costing.
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$56,210 higher than under absorption costing.
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