Krug Corporation manufactures a variety of products. The following data pertain to the company's operations over the last two years:
-What was the absorption costing net operating income this year?
A)$91,300
B)$93,300
C)$95,900
D)$88,500

Question

Krug Corporation manufactures a variety of products. The following data pertain to the company's operations over the last two years: 
-What was the absorption costing net operating income this year?
A)$91,300 
B)$93,300 
C)$95,900 
D)$88,500

Quizplus · Accepted Answer

Absorption costing net operating income is calculated by adding fixed manufacturing overhead costs to variable manufacturing costs and then subtracting this total from sales revenue. In this case, sales revenue is $200,000, variable manufacturing costs are $60,000, and fixed manufacturing overhead costs are $31,300. Therefore, absorption costing net operating income is $200,000 - ($60,000 + $31,300) = $91,300.

Krug Corporation Manufactures a Variety of Products