Question

1. Wight Corporation has provided its contribution format income statement for June. The company produces and sells a single product.

Sales (9,600 units)	$	336,000
Variable expenses		144,000
Contribution margin		192,000
Fixed expenses		137,000
Net operating income	$	55,000

If the company sells 9,700 units, its net operating income should be closest to:

• $57,000

• $55,573

• $58,500

• $55,000

2. Krepps Corporation produces a single product. Last year, Krepps manufactured 34,080 units and sold 28,200 units. Production costs for the year were as follows:

Direct materials	$	259,008
Direct labor	$	153,360
Variable manufacturing overhead	$	269,232
Fixed manufacturing overhead	$	443,040

Sales totaled $1,494,600 for the year, variable selling and administrative expenses totaled $163,560, and fixed selling and administrative expenses totaled $224,928. There was no beginning inventory. Assume that direct labor is a variable cost.

Under absorption costing, the ending inventory for the year would be valued at:

• $264,040

• $194,040

• $221,540

• $255,540

Answer 1