Answer:
Instructions are listed below.
Explanation:
Given the following information:
Units sold during year 30,000
Units produced during year 45,000
Variable manufacturing cost per unit $4.50
Fixed manufacturing overhead (in total) $20,250
Selling price per unit $12.00
Variable selling and administrative expense per unit $1.00
Fixed selling and administrative expenses (in total) $4,000
Under the absorption costing method, the cost of goods sold includes the fixed manufacturing cost.
First, we need to calculate the unitary product cost:
Unitary product cost= variable cost per unit + unitary fixed manufacturing cost
Unitary product cost= 4.5 + (20,250/45,000)= $4.95
Now, we will do the income statement:
Sales= 30,000*12= 360,000
Cost of goods sold= 4.95*30,000= (148,500)
Gross profit= 211,500
Variable selling and administrative expense= (1.00*30,000)= (30,000)
Fixed selling and administrative expenses= (4,000)
Net operating income= 177,500
