Answer:
B) $8,400
Explanation:
Absorption costing consider all the cost incurred in production either variable or fixed as production cost.
As we know variable cost vary with the change in the sale but the fixed costs remains constant whatever the level of sale is.
As per given data
Selling price = $6,600
Variable manufacturing cost = $3,600
Manufacturing Fixed Cost = $18,000
Total cost per unit = $3,600 + $18,000/20 = $4,500
Sales = Selling price x Numbers of units sold = $6,600 x 16 = $105,600
Cost of goods sold = Units sold x Cost per unit = 16 units x $4,500 = $72,000
Gross income = Sales - Cost of Goods sold = $105,600 - $72,000 = $33,600
Selling and Admin Cost = Variable cost + Fixed = (16 x $75) + $24,000 = $25,200
Net Income = Gross Income - Selling and Admin cost = $33,600 - $25,200 = $8,400
