Krepps Corporation Produces a Single Product

question 24

Multiple Choice

Krepps Corporation produces a single product. Last year, Krepps manufactured 20,000 units and sold 15,000 units. Production costs for the year were as follows:
Sales totaled $825,000 for the year, variable selling and administrative expenses totaled $108,000, and fixed selling and administrative expenses totaled $165,000. 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:

• A) $101,250 lower than under absorption costing.
• B) $60,000 lower than under absorption costing.
• C) $101,250 higher than under absorption costing.
• D) $60,000 higher than under absorption costing.

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