Units Produced 20,000

Units Sold 17,000

Unit Sales Price $ 240

Manufacturing Cost Per Unit

Direct Material $30

Direct Labor $30

Variable Manufacturing Overhead $17

Fixed Manufacturing Overhead ($400,000/20,000) = $ 20

Full Manufacturing Cost Per Unit $97

Nonmanufacturing Costs

Variable Selling Expenses $ 71,000

Fixed General and Administrative Costs $ 88,000

What is Jasper Enterprise's income under absorption costing?

Instructions are below.

Explanation:

Giving the following information:

Units Produced 20,000

Units Sold 17,000

Unit Sales Price $ 240

Full Manufacturing Cost Per Unit $97

Under the absorption costing method, the fixed manufacturing overhead is part of the product cost.

Income statement:

Sales = (17,000*240) = 4,080,000

Cost of goods sold = (17,000*97) = (1,649,000)

Gross profit = 2,431,000

Variable Selling Expenses = (71,000)

Fixed General and Administrative Costs = (88,000)

Net operating income = 2,272,000