Krepps Corporation produces a single product. Last year, Krepps manufactured 28,000 units and sold 22,500 units. Production costs for the year were as follows: Sales totaled $1,046,250 for the year, variable selling and administrative expenses totaled $117,000, and fixed selling and administrative expenses totaled $201,600. 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:
A) $33,000 lower than under absorption costing.
B) $33,000 higher than under absorption costing.
C) $66,000 lower than under absorption costing.
D) $66,000 higher than under absorption costing.

Question

Krepps Corporation produces a single product. Last year, Krepps manufactured 28,000 units and sold 22,500 units. Production costs for the year were as follows:  Sales totaled $1,046,250 for the year, variable selling and administrative expenses totaled $117,000, and fixed selling and administrative expenses totaled $201,600. 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:
A) $33,000 lower than under absorption costing. 
B) $33,000 higher than under absorption costing. 
C) $66,000 lower than under absorption costing. 
D) $66,000 higher than under absorption costing.

Quizplus · Accepted Answer

The Answer of Krepps Corporation produces a single product. Last year, Krepps manufactured 28,000 units and sold 22,500 units. Production costs for the year were as follows:  Sales totaled $1,046,250 for the year, variable selling and administrative expenses totaled $117,000, and fixed selling and administrative expenses totaled $201,600. 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:
A) $33,000 lower than under absorption costing. 
B) $33,000 higher than under absorption costing. 
C) $66,000 lower than under absorption costing. 
D) $66,000 higher than under absorption costing.

Krepps Corporation Produces a Single Product