Soccer nets for use in professional games. They sell them for $200 each. Selected data for the company's operations last year follow:
Units in beginning inventory 0
Units produced 500
Units sold 300
Units in ending inventory 200
Variable costs per unit:
Direct materials $75
Direct labor 30
Variable manufacturing overhead 10
Variable selling and administrative 5
Fixed costs:
Fixed manufacturing overhead $2,000
Fixed selling and administrative $1,000
a. Assume that the company uses variable costing, compute the net operating income. Show computations.
b. Assuming that the company uses absorption costing, compute the net operating income. Show computations.