Net Operating Income from Unit Production
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Butteco Corporation has provided the following cost data for last year when 100,000 units were produced and sold:
Raw materials ...................................... $200,000
Direct labor .......................................... 100,000
Manufacturing overhead ....................... 200,000
Selling and administrative expense ......... 150,000
All costs are variable except for $100,000 of manufacturing overhead and $100,000 of selling and administrative expense. There are no beginning or ending inventories. If the selling price is $10 per unit, the net operating income from producing and selling 110,000 units would be:
(Points: 5)
$450,000
$385,000
$405,000
$560,000
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Solution Summary
The solution explains how to calculate the net operating income.
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We divide the costs into fixed and variable
Variable cost is
Raw materials ...................................... $200,000
Direct labor ...
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