174. CSO: 1C1e LOS: 1C1g
Consider the following situation for Donaldson Company for the prior year.
• The company produced 1,000 units and sold 900 units, both as budgeted.
• There were no beginning or ending work-in-process inventories and no
beginning finished goods inventory.
• Budgeted and actual fixed costs were equal, all variable manufacturing costs
are affected by volume of production only, and all variable selling costs are
affected by sales volume only.
• Budgeted per unit revenues and costs were as follows.
Per Unit
Sales price $100
Direct materials 30
Direct labor 20
Variable manufacturing costs 10
Fixed manufacturing costs 5
Variable selling costs 12
Fixed selling costs ($3,600 total) 4
Fixed administrative costs ($1,800 total) 2
Assuming that Donaldson uses variable costing, the operating income for the prior year
was
a. $13,600.
b. $14,200.
c. $14,800.
d. $15,300.
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