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Morwenna, Inc. reports the following information for August: Sales Revenue $900,000 Variable Cost of Goods Sold 120,000 Fixed Cost of Goods Sold 60,000 Variable Selling and Administrative Costs 150,000 Fixed Selling and Administrative Costs 50,000 Calculate the operating income for August using absorption costing.

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facundobuzzetti

Answer:

Net operating income= $520,000

Explanation:

First, we need to calculate the gross profit:

Gross profit= sales revenue - total cost of goods sold

Gross profit=  900,000 - 120,000 - 60,000

Gross profit= 720,000

Now, the net operating income:

Net operating income= gross profit - total Selling and Administrative Costs

Net operating income= 720,000 - 150,000 - 50,000

Net operating income= $520,000

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