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25 March, 02:41

Fasetech, Inc. has collected the following data.? (There are no beginning? inventories.)

Units produced

510

units

Sales price

?$150

per unit

Direct materials

?$16

per unit

Direct labor

?$10

per unit

Variable manufacturing overhead

?$10

per unit

Fixed manufacturing overhead

?$16,000

per year

Variable selling and administrative costs

?$9

per unit

Fixed selling and administrative costs

?$10,500

per year

What is the operating income using absorption costing if 500 units are? sold? (Round any intermediate calculations to the nearest? cent, and your final answer to the nearest? dollar.)

A.?$27,500

B.?$38,315

C.?$26,315

D.?$31,641

+2
Answers (1)
  1. 25 March, 03:36
    0
    The correct answer is C.

    Explanation:

    Giving the following information:

    Units produced = 510 units

    Sales price = $150 per unit

    Direct materials = $16 per unit

    Direct labor = $10 per unit

    Variable manufacturing overhead = $10 per unit

    Fixed manufacturing overhead = $16,000 per year

    Variable selling and administrative costs = $9 per unit

    Fixed selling and administrative costs = $10,500 per year

    Units sold = 500

    Under the absorption costing method, the fixed overhead costs get allocated as a product cost.

    Unitary fixed overhead = 16,000/510 = $31.37

    Total unitary cost = direct material + direct labor + total overhead

    TUC = 16 + 10 + (10 + 31.37) = $67.37

    Income statement:

    Sales = 500*150 = 75,000

    COGS = 67.37*500 = (33,685)

    Gross profit = 41,315

    Total variable selling and administrative costs = (9*500) = (4,500)

    Fixed selling and administrative costs = (10,500)

    Net operating profit = 26,315
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