The net operating income for the year under super-variable costing is:
A)$856,000
B)$544,000
C)$808,000
D)$1,066,000

Question

Quizplus · Accepted Answer

Super-variable costing includes only the variable costs in the cost of goods sold and treats fixed costs as period expenses. Therefore, the net operating income can be calculated as follows:

Sales revenue - Variable costs (direct materials, direct labor, variable manufacturing overhead, variable selling and administrative expenses) - Period fixed expenses = Net operating income

Plugging in the numbers from the question, we get:

$5,400,000 - ($2,400,000 + $1,440,000 + $720,000 + $540,000 + $252,000) - $144,000 = $808,000

The Net Operating Income for the Year Under Super-Variable Costing