Answer: $164,000
Explanation:
Given the following ;
All beginning inventory amounts equaled $0.
Units produced = 30,000 units Units sold = 18,000 units
Direct materials = $ 14 per unit Direct labor = $ 16 per unit
Sales price = $61
Variable overhead=$90,000 in total Fixed overhead = $150,000 in total
Under absorption costing, overhead cost is added to the production cost.
Therefore,
Variable overhead cost per unit = $90,000 ÷ $30,000 = $3 per unit
Fixed overhead cost per unit = $150,000 ÷ 30,000 = $5 per unit
Total cost per unit = $(14 + 16 + 3 + 5) = $38
Total unit sold × total cost per unit
18,000 × $38 = $684,000
Total units sold × price per unit
$18,000 × $61 = $1,098,000
$1,098,000 - 684,000 = $414,000
Net income = $414,000 - operating expenses
Net income = $414,000 - $250,000 = $164,000
