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MBA, Ph.D in Management
Harvard university
Feb-1997 - Aug-2003
Professor
Strayer University
Jan-2007 - Present
Please help, I'm having a hard time with this problem.
Khanam Corporation, which has only one product, has provided the following data concerning its most recent month of operations:
Â
 Selling price $133  Â
Units in beginning inventory 0Â Â Â
Units produced 8,850Â
Units sold 8,950
Units in ending inventory 850Â
Variable costs per unit:Â Â Â Â
Direct materials $29Â Â Â Â
Direct labor $46Â Â Â Â Â
Variable manufacturing overhead $10Â Â Â Â
Variable selling and administrative $20Â Â Â
Fixed costs:Â Â Â Â Â
Fixed manufacturing overhead $70,800Â Â Â Â Â
Fixed selling and administrative $164,200Â Â
Â
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.
Â
What is the net operating income for the month under absorption costing?
Â
$14,800
$4,100
$4,100
$24,100
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