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Krepps Corporation produces a single product. Last year, Krepps manufactured 25,000 units and sold 20,000 units. Production costs for the year were as follows:       Direct materials $ 180,000 Direct labor $ 120,000 Variable manufacturing overhead $ 210,000 Fixed manufacturing overhead $ 250,000     Sales totaled $850,000 for the year, variable selling and administrative expenses totaled $110,000, and fixed selling and administrative expenses totaled $170,000. There was no beginning inventory. Assume that direct labor is a variable cos

Krepps Corporation produces a single product. Last year, Krepps manufactured 25,000 units and sold 20,000 units. Production costs for the year were as follows:       Direct materials $ 180,000 Direct labor $ 120,000 Variable manufacturing overhead $ 210,000 Fixed manufacturing overhead $ 250,000     Sales totaled $850,000 for the year, variable selling and administrative expenses totaled $110,000, and fixed selling and administrative expenses totaled $170,000. There was no beginning inventory. Assume that direct labor is a variable cos

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Krepps Corporation produces a single product. Last year, Krepps manufactured 25,000 units and sold 20,000 units. Production costs for the year were as follows:

 

   
Direct materials $ 180,000
Direct labor $ 120,000
Variable manufacturing overhead $ 210,000
Fixed manufacturing overhead $ 250,000
 

 

Sales totaled $850,000 for the year, variable selling and administrative expenses totaled $110,000, and fixed selling and administrative expenses totaled $170,000. There was no beginning inventory. Assume that direct labor is a variable cost.

 

Under variable costing, the company's net operating income for the year would be:

*MULTIPLE CHOICE: see image

Krepps Corporation produces a single product. Last year, Krepps manufactured 25,000 units and sold 20,000 units. Production costs for the year were as follows: $180,000 $120,000 Variable manufacturing overhead $210,000 $250,000 Direct materials Direct labor Fixed manufacturing overhead Sales totaled $850,000 for the year, variable selling and administrative expenses totaled $110,000, and fixed selling and administrative expenses totaled $170,000. There was no beginning inventory. Assume that direct labor is a variable cost. Under variable costing, the company's net operating income for the year would be: Multiple Choice $28,000 lower than under absorption costing. $28,000 higher than under absorption costing. $50,000 lower than under absorption costing. $50,000 higher than under absorption costing.
Transcribed Image Text:Krepps Corporation produces a single product. Last year, Krepps manufactured 25,000 units and sold 20,000 units. Production costs for the year were as follows: $180,000 $120,000 Variable manufacturing overhead $210,000 $250,000 Direct materials Direct labor Fixed manufacturing overhead Sales totaled $850,000 for the year, variable selling and administrative expenses totaled $110,000, and fixed selling and administrative expenses totaled $170,000. There was no beginning inventory. Assume that direct labor is a variable cost. Under variable costing, the company's net operating income for the year would be: Multiple Choice $28,000 lower than under absorption costing. $28,000 higher than under absorption costing. $50,000 lower than under absorption costing. $50,000 higher than under absorption costing.
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