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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 manufacturing overhead $80,000
    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.

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    https://brainmass.com/business/cost-volume-profit-analysis/hellmans-net-operating-income-564375

    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.

    $2.19