Question

Zippy company manufactured 10,000 units in December with a total product cost of $25,472 They had zero finished goods inventory at the start of December. In December Zippy sold 7,364 units at a unit price of $5.26. Period expenses were $3,722. What is the amount of Zippy's operating income? Round any intermediate calculations to four decimal places.

Answer 1

The amount of Zippy's operating income is

• $16255.0592

Cost per unit is given as

$= \frac{total cost of goods manufactured}{number of units}\\\\ = \frac{25472}{10000}\\\\ = 2.5472 per unit$

So, cost of goods sold

$= Number of units * cost per unit\\\\ = 7364 * 2.5472 \\\\ = 18757.5808$

Therefore, operating income

$= sales - cost of goods sold - period expenses\\\\ = 7364*5.26 - 18757.5808 - 3722\\\\ = 16255.0592$

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