Reference no: EM132521448

Khanam Company, which has only one product, has provided the following data concerning its most recent month of operations:

Selling price                                         $97

Units in beginning inventory                    500

Units produced                                     8,400

Units in ending inventory                         400

Variable costs per unit:

Direct materials                                       $20

Direct labour                                          $37

Variable manufacturing overhead                $1

Variable selling and administrative               $11

Fixed costs:

Fixed manufacturing overhead                   $67,200

Fixed selling and administrative                    $161,500

• The company produces the same number of units every month, although the sales in units vary from month to month. The company's variable costs per unit and total fixed costs have been constant from month to month.

Question 1: What was the operating income for the month under variable costing?

Multiple Choice

Option 1: $3,200.

Option 2: $8,500.

Option 3: $9,300.

Option 4: $15,100