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Black_prince [1.1K]
3 years ago
14

Donovan Company incurred the following costs while producing 500 units: direct materials $10 per unit, direct labour $25 per uni

t, variable manufacturing overhead, $15 per unit, total fixed overhead costs, $10,000; variable selling and administrative costs, $5 per unit; total fixed selling and administrative costs, $7,500. There are no beginning inventories.
What is the operating income using absorption costing if 500 units are sold for $100 each?

a. $500
b. $2,500
c. $2,750
d. $5,000
Business
1 answer:
Dafna1 [17]3 years ago
8 0

Answer:

Option (D) is correct.

Explanation:

Unit product cost:

= Direct materials + Direct labor + Variable manufacturing overhead + Fixed manufacturing overhead

= $10 + $25 + $15 + $20

= $70

Operating income using absorption costing:

= (500 units × $100) - (500 units × $70) - (500 units × $5) - $7,500

= $50,000 - $35,000 - $2,500 - $7,500

= $5,000

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Explanation:

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3 0
3 years ago
North Company has completed all of its operating budgets.The sales budget for the year shows 50,600 units and total sales of $2,
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Answer:

Instructions are listed below.

Explanation:

Giving the following information:

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Selling and administrative expenses are expected to be $304,000.

Income taxes are estimated to be $270,180.

Income statement:

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5 0
3 years ago
When a company discontinues an operation and disposes of the discontinued operation (component), the transaction should be inclu
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Answer:

1. an amount after continuing operations.

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Answer:

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