Reference no: EM132903094

Moskowitz Corporation has provided the following data for its two most recent years of operation:

Selling price per unit$ 91

Manufacturing costs:

Variable manufacturing cost per unit produced:

Direct materials $13

Direct labor $7

Variable manufacturing overhead $3

Fixed manufacturing overhead per year $480,000

Selling and administrative expenses:

Variable selling and administrative expense per unit sold $6

Fixed selling and administrative expense per year $84,000

                                                   Year 1                 Year 2

Units in beginning inventory         0                 3,000

Units produced during the year   12,000          10,000

Units sold during the year             9,000          10,000

Units in ending inventory             3,000           3,000

Problem 1: The net operating income (loss) under variable costing in Year 2 is closest to:

Multiple Choice

Option 1: $80,000

Option 2: $680,000

Option 3: $620,000

Option 4: $56,000