Answer:
Sales 2,600,000
Less Cost of Goods Sold
Opening Stock 0
Add Cost of Goods Manufactured
Direct materials 1,218,000
Direct labor 522,000
Variable factory overhead 87,000
Fixed factory overhead 130,500
Less Closing Stock (350×(1,957,500/4,350) (157,500) (1,800,000)
Gross Profit 800,000
Less Expenses
Selling and administrative expenses:
Variable selling and administrative expenses (60,000)
Fixed selling and administrative expenses (25,000)
Net Income 715,000
Explanation:
<em>Product Cost (Absorption Costing) = Direct Materials + Direct Labor + Variable Overhead + Fixed Overheads</em>
<em>Period Cost (Absorption Costing) = All Non- Manufacturing Overheads</em>
