Answer:
Operating income is $28,197.2
Explanation:
In order to calculate operating income, first we have to calculate total product cost per unit which is calculated as shown below:
Direct material per unit = $30
Direct labor = $35
Variable manufacturing overhead per unit = $10
Fixed manufacturing overhead per unit = 23,000 ÷ 580 = $39.66 per unit
Product cost per unit = 30 + 35 + 10 + 39.66 = $114.66
Now compute operating income as shown below:
Total sales = Per unit sales price × Units sold
= $230 × 580
= $133,400
Cost of goods sold = Units produced × product cost per unit
= 580 × 114.66
= $66,502.8
Gross profit = Sales - COGS
= 113,400 - 66,502.8
= $46,897.2
Fixed selling and administrative cost = $10,000
Variable selling and administrative cost = 15 × 580 = $8,700
Total selling and administrative cost = 10,000 + 8,700 = $18,700
Operating income = Gross profit - total selling and administrative cost
= $46,897.2 - 18,700
= $28,197.20
