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# Absorption costing net operating income

Can you help me with these three problems?

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

Sales (8,400 units) \$764,400
Variable expenses 445,200
Contribution margin 319,200
Fixed expenses 250,900
Net operating income \$ 68,300

If the company sells 8,200 units, its total contribution margin should be closest to:

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8. The following data pertain to last year's operations at Clarkson, Incorporated, a company that produces a single product:

Units in beginning inventory 0
Units produced 100,000
Units sold 98,000

Selling price per unit \$10.00

Variable costs per unit:
Direct materials \$1.50
Direct labor \$2.50

Fixed costs per year:

What was the absorption costing net operating income last year?

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3. At a volume of 20,000 direct labor hours, Tirso Company incurs \$50,000 in factory overhead costs, including \$10,000 in fixed costs. Assuming that this activity is within the relevant range, if volume increases to 25,000 direct labor hours, Tirso Company would expect to incur total factory overhead costs of:

#### Solution Preview

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

Sales (8,400 units) \$764,400
Variable expenses 445,200
Contribution margin 319,200
Fixed expenses 250,900
Net operating income \$ 68,300

If the company sells 8,200 units, its total contribution margin should be ...

#### Solution Summary

Response provides the steps to compute the absorption costing net operating income

\$2.19