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Krepps Corporation produces a single product. Last year, Krepps manufactured 33,910 units and sold 28,100 units....

Krepps Corporation produces a single product. Last year, Krepps manufactured 33,910 units and sold 28,100 units. Production costs for the year were as follows:

Direct materials $ 247,543
Direct labor $ 176,332
Variable manufacturing overhead $ 284,844
Fixed manufacturing overhead $ 474,740

Sales totaled $1,405,000 for the year, variable selling and administrative expenses totaled $148,930, and fixed selling and administrative expenses totaled $247,543. 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:

Solutions

Expert Solution

Under variable costing, the company's net operating income for the year would be: $(53,503) .............

The will be loss of 53503 so put the answer in negative numbers

Working

Variable costing income statement
Sales $ 1,405,000.00
Variable Cost
Variable cost of Goods Sold (28100 x 20.90) $   587,290.00
Variable Selling & administrative $   148,930.00
Total variable cost $      736,220.00
Contribution margin $      668,780.00
Fixed Costs:
Fixed Cost of Goods Sold $   474,740.00
Fixed Selling & Administrative $   247,543.00
Total Fixed Cost $      722,283.00
Net Income $      (53,503.00)

.

Direct material (247543/33910) $                   7.30
Direct labor (176332/33910) $                   5.20
Variable factory Overhead (284844/33910) $                   8.40
Total cost per unit $                20.90

ekkarill92 answered 2 years ago
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