Answer:
C. $2,112
Explanation:
Under <em>absorption costing</em>, cost of a finished product will include the costs of direct materials
, direct labor
, variable and fixed manufacturing overhead.
Solution:
Determine first the <em>cost of sales</em>:
Variable product cost $3,780 + Fixed product cost $1,890 = $5,670
Total product cost $5,670 ÷ 210 units manufactured = $27/unit
$27 per unit cost × 180 units sold = $4,860 cost of sales
Then,
Net Sales $8,400 - Cost of Sales $4,860 = $3,540 Profit
Profit $3,540 - Selling/Admin variable & fixed costs $1,428 = <u>$2,112 Net operating income</u>