The company is considering using either super-variable costing or a variable cos
ID: 2468711 • Letter: T
Question
The company is considering using either super-variable costing or a variable costing system that assigns $28 of direct labor cost to each unit that is produced. Which of the following statements is true regarding the net operating income in the first year?
Super-variable costing net operating income exceeds variable costing net operating income by $168,000.
Super-variable costing net operating income exceeds variable costing net operating income by $420,000.
Variable costing net operating income exceeds super-variable costing net operating income by $420,000.
Variable costing net operating income exceeds super-variable costing net operating income by $168,000.
Explanation / Answer
In this Case : Super-variable costing net operating income exceeds variable costing net operating income by $420,000.
(25,20000)/36000=70*6000= 420,000