Hatfield Corporation, which has only one product, has provided the following data concerning its most recent month of operations: What is the net operating income for the month under variable costing?
A)$6,600
B)$5,600
C)($17,200)
D)$12,200

Question

Hatfield Corporation, which has only one product, has provided the following data concerning its most recent month of operations:  What is the net operating income for the month under variable costing?
A)$6,600 
B)$5,600 
C)($17,200) 
D)$12,200

Quizplus · Accepted Answer

Net operating income under variable costing is calculated by subtracting all variable expenses from the total contribution margin. Total contribution margin is calculated as sales revenue minus variable expenses. In this case, the total contribution margin is ($62,000 - $38,400) = $23,600. Total variable expenses are ($49,600 - $38,400) = $11,200. Therefore, the net operating income is $23,600 - $11,200 = $12,400. Choice A and D are incorrect as they do not match the calculation. Choice C is incorrect as it is negative, which does not make sense. Therefore, the correct answer is B.

Hatfield Corporation, Which Has Only One Product, Has Provided the Following