Neef Corporation has provided the following data for its two most recent years o

Question

Neef Corporation has provided the following data for its two most recent years of operation: selling price per unit Manufacturing costs: 84 Variable manufacturing cost per unit produced: Direct materials 12 Direct labor Variable manufacturing overhead Fixed manufacturing overhead per year $432, 000 selling and administrative expenses: Variable selling and administrative expense per unit sold Pixed selling and administrative expense per year 61,000 Units in beginning inventory Units produced Units sold Units in ending inventory3,000 Year 1Year 2 0 3,000 12,000 9,000 9, 000 10,000 The net operating income (loss) under absorption costing in Year 1 is closest to

Explanation / Answer

Calculate unit product cost under absorption costing for year 1 :

Income statement under absorption costing :

Year 1 net operating income under absorption costing is $137000

Unit product cost Direct material 12 Direct labour 5 Variable manufacturing overhead 4 Fixed manufacturing overhead (432000/12000) 36 Unit product cost 57

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