Krepps Corporation produces a single product. Last year, Krepps manufactured 32,150 units and sold 26,900...
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Accounting
Krepps Corporation produces a single product. Last year, Krepps manufactured 32,150 units and sold 26,900 units. Production costs for the year were as follows:
| Direct materials | $ 234,695 |
|---|---|
| Direct labor | $ 154,320 |
| Variable manufacturing overhead | $ 279,705 |
| Fixed manufacturing overhead | $ 482,250 |
Sales totaled $1,277,750 for the year, variable selling and administrative expenses totaled $158,710, and fixed selling and administrative expenses totaled $212,190. 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
$28,350 higher than under absorption costing.
$28,350 lower than under absorption costing.
$78,750 higher than under absorption costing.
$78,750 lower than under absorption costing.
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