Question

Hex Industries reports the following information for May: Sales $ 990,000 Fixed cost of goods sold 118,000 Variable cost of goods sold 268,000 Fixed selling and administrative costs 118,000 Variable selling and administrative costs 143,000 Calculate the gross profit for May under absorption costing.

Answer 1

The gross profit of Hex Industries for May under absorption costing is $604,000.

What is absorption costing?

Under absorption costing, the total or full costs of manufacturing or (variable and fixed) cost of goods sold are included when determining the gross profit.

Data and Calculations:

Sales $ 990,000

Variable cost of goods sold 268,000

Fixed cost of goods sold 118,000

Total cost of goods sold = $386,000

Gross profit = $604,000 ($990,000 - $386,000)

Fixed selling and administrative costs 118,000

Variable selling and administrative costs 143,000

Total period costs = $261,000 ($118,000 + $143,000)

Net income = $343,000 ($604,000 - $261,000)

Thus, the gross profit of Hex Industries for May under the absorption costing method is $604,000.

Learn more about the absorption costing method at brainly.com/question/14609187

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