Posted: July 6th, 2016

Assume that the company uses variable costing, compute the net operating income?

Strong Wood Company is a distributor of patio furniture. Data concerning the next month’s budget appear below.
Selling price $290.00
Variable expense $174.00
Fixed expense $158,000.00
Unit sales 1,500 units per month

a. What is the company’s margin of safety? (Please show all work so I am able to learn the formulas)
b. What is the company’s margin of safety as a percentage of sales? (Please show all work so I am able to learn the formulas)

I am very interested in learning how to do this, so any help with formulas is great, and please show all computations in your work.

Soccer nets for commercial use sell for $200.00 each. Selected data for the company’s operations for the last year follow:

Units in beginning inventory 0
Units produced 500
Units sold 300
Units ending inventory 200
Variable costs per unit
Direct materials $75
Labor 30
Variable manufacture overhead 10
Selling and administrative 5
Fixed costs
Fixed manufacturing overhead $2000
Selling and administrative $100

A. Assume that the company uses variable costing, compute the net operating income. (Please show all work.)
B. Assume that the company uses the absorption costing, compute the net operating income. (Show all work.)