Use the information below to answer the following question(s).
Beauty Supply Company manufactures shampoo. The supervisor has provided the following information and stated that standard costing is used for manufacturing, marketing, and administrative costs.

There were no beginning or ending inventories of materials or work-in-process.
-What would Beauty Supply Company's operating income (loss) be for January and February, respectively, using the absorption costing approach?

Question

Use the information below to answer the following question(s).
Beauty Supply Company manufactures shampoo. The supervisor has provided the following information and stated that standard costing is used for manufacturing, marketing, and administrative costs.

There were no beginning or ending inventories of materials or work-in-process.
-What would Beauty Supply Company's operating income (loss) be for January and February, respectively, using the absorption costing approach?

Quizplus · Accepted Answer

Absorption costing includes all manufacturing costs (fixed and variable) in the cost of a product. The operating income (loss) is calculated by subtracting total costs from sales revenue. The correct figures for January and February using this method are $(24,500) and $(26,050), respectively.

Use the Information Below to Answer the Following Question(s)