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# Hellman's Net Operating Income

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Hellman Manufacturing has the following cost information available for 2012:

Direct materials \$6.00 per unit
Direct labor \$4.00 per unit
Variable manufacturing overhead \$2.00 per unit
Variable selling and administrative costs \$1.00 per unit
Fixed selling and administrative costs \$25,000

During 2012, Merriman produced 12,500 units out of which 11,000 units were sold for \$60 each.

I need help in answering these questions:
A. Calculate Hellman's net operating income assuming the company uses variable costing.
B. Calculate Hellman's net operating income assuming the company uses absorption costing.

#### Solution Preview

Solution is also attached.
Steps :
1) First Find Cost of Goods Sold which is Opening Inventory+Manufacturing expenses-Closing Inventory
2) Find Gross Profit= Sales-COGS
3) Find Net Profit= Gross Profit- Other ...

#### Solution Summary

This solution helps in estimating Hellman's net operating income assuming the company uses variable costing.

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