Answer:
The correct answer is C.
Explanation:
Giving the following information:
Units produced= 510 units
Sales price= $150 per unit
Direct materials= $16 per unit
Direct labor= $10 per unit
Variable manufacturing overhead= $10 per unit
Fixed manufacturing overhead= $16,000 per year
Variable selling and administrative costs= $9 per unit
Fixed selling and administrative costs= $10,500 per year
Units sold= 500
Under the absorption costing method, the fixed overhead costs get allocated as a product cost.
Unitary fixed overhead= 16,000/510= $31.37
Total unitary cost= direct material + direct labor + total overhead
TUC= 16 + 10 + (10 + 31.37)= $67.37
Income statement:
Sales= 500*150= 75,000
COGS= 67.37*500= (33,685)
Gross profit= 41,315
Total variable selling and administrative costs= (9*500)= (4,500)
Fixed selling and administrative costs= (10,500)
Net operating profit= 26,315
