Hi-Tech manufactures basic cell phones for cell phone service providers. Data for March and April's production follows:
Hi-Tech started March with 1,000 cell phones that had variable costs of $28.00 per phone and fixed manufacturing costs of $2.00 per phone. Hi-Tech uses a FIFO cost flow.
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Calculate operating income for March, 2012 using absorption costing?
A) $663,000
B) $763,000
C) $683,000
D) $583,000

Question

Hi-Tech manufactures basic cell phones for cell phone service providers. Data for March and April's production follows:
 Hi-Tech started March with 1,000 cell phones that had variable costs of $28.00 per phone and fixed manufacturing costs of $2.00 per phone. Hi-Tech uses a FIFO cost flow.
-
Calculate operating income for March, 2012 using absorption costing?
A) $663,000 
B) $763,000 
C) $683,000 
D) $583,000

Quizplus · Accepted Answer

Operating income under absorption costing includes both variable and fixed manufacturing costs in the cost of goods sold. Without specific details on sales, variable costs, fixed costs, and production volume, it's impossible to calculate or confirm the correct answer. However, based on the options provided, if A is identified as the correct choice, it means that after accounting for all costs and revenues, the operating income is $663,000.

Hi-Tech Manufactures Basic Cell Phones for Cell Phone Service Providers