Mccrone Corporet on hes proeded the following data for its two most recent yeers

Question

Mccrone Corporet on hes proeded the following data for its two most recent yeers ofoperaton: 59 Selling price per unit Manufaeturing costs Variable saneEscturing cost per unit preduced: Direct material $ 11 Direct labor Variable nanufastaring overhead Pixed nanufacturing overhead per year $88,000 ellingand adninistrative expenses Variable seliing and edminLetrative expense per unit Boid Fixed elling and adninistrative experse per year $80, CO0 Year 1 Year 2 Units in beginning inventory Unite produced during the year aits sold during the year Unite in endin inventory 11,000 8,000 ,000 3,CO 1,000 4,000 The net opereting income 0osel under variable oo ng in Year 1 closest to 380000 72000

Explanation / Answer

Sales 590000 Variable expenses: Variable cost of goods sold 210000 Variable selling and administrative expenses 40000 250000 Contribution margin 340000 Fixed expenses: Fixed manufacturing overhead 88000 Fixed selling and administrative expenses 80000 168000 Net operating income 172000 Option 4 is correct

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