Answer:
Instructions are below.
Explanation:
Giving the following information:
Units manufactured= 2,400
Units sold= 2,000
Sales= $2,150,000
Manufacturing costs:
Direct materials= $960,000
Direct labor= $420,000
Variable manufacturing cost= $156,000
Fixed manufacturing cost= $288,000
Total= $1,824,000
Selling and administrative expenses:
Variable= $204,000
Fixed= $96,000
Total= $300,000
<u>Under the absorption costing, the cost of goods sold is calculated using the direct materials, direct labor, and total unitary manufacturing overhead.</u>
First, we need to calculate the cost of goods sold:
Unitary product cost= total cost/units produced
Unitary product cost= 1,824,000/2,400= $760
Now, we can determine the net operating income:
Sales= 2,150,000
COGS= (2,000*760)= (1,520,000)
Gross profit= 630,000
Total Selling and administrative expenses= (300,000)
Net operating income= 330,000
