Question
Letcher Corporation manufactures and sells one product. The following information pertains to the companys first year of operations: Variable costs per unit: Direct materials $
Letcher Corporation manufactures and sells one product. The following information pertains to the companys first year of operations: Variable costs per unit: Direct materials $ 108 Fixed costs per year: Direct labor $ 1,496,000 Fixed manufacturing overhead $ 5,848,000 Fixed selling and administrative expenses $ 3,001,400 The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 68,000 units and sold 65,600 units. The companys only product is sold for $278 per unit. The company is considering using either super-variable costing or a variable costing system that assigns $22 of direct labor cost to each unit that is produced. Which of the following statements is true regarding the net operating income in the first year? Multiple Choice Variable costing net operating income exceeds super-variable costing net operating income by $206,400. Super-variable costing net operating income exceeds variable costing net operating income by $206,400. Variable costing net operating income exceeds super-variable costing net operating income by $52,800. Super-variable costing net operating income exceeds variable costing net operating income by $52,800.
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