Question

Hyper Color Company manufactures widgets. The following data is related to sales and production of the widgets for last year. Selling price per unit Variable manufacturing costs per unit Variable selling and administrative expenses per unit Fixed manufacturing overhead​ (in total) Fixed selling and administrative expenses​ (in total) Units produced during the year Units sold during year Using absorption​ costing, what is operating income for last​ year? (Round any intermediary calculations to the nearest whole​ dollar.)

Answer 1

Answer: $24,000

Explanation:

Operating income under absorption costing:

= Sales - Cost of goods sold - Selling and admin expenses

Cost of goods sold = Variable production cost + Fixed production cost

= (61 * 1,000 units sold) + (32,000 / 1,500 units produced * 1,000 units sold)

= $82,333

Selling and admin expenses:

= Variable + Fixed

= (6 * 1,000) + 8,000

= $14,000

Operating income = (120 * 1,000) - 82,333 - 14,000

= $23,667

= $24,000