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
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 |
$ | 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
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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