Only one question using this data: Andrea\'s Hobbies produces and sells a luxury

ID: 341188 • Letter: O

Question

Only one question using this data: Andrea's Hobbies produces and sells a luxury animal pillow for $80.00 per unit. In the first month of operation, 3,000 units were produced and 2.250 units were sold. Actual fixed costs are the same as the amount budgeted for the month. Other information for the month includes: ariable manufacturing costs ariable marketing costs ixed manufacturing costs unit r month nding inventories irect materials -0 WIP Finished goods 750 units What is operating income when using absorption costing? $8,000 $33,000 ( ($23,500) $37,500

Explanation / Answer

Answer:

Operating income when absorption costing =$33,000

working notes for the above answer:

Selling piece

less: Cost of ggods sold

Manufacturing cost

(38+ (60,000/3000)=38+20=58

Gross profit per unit

Multipled by units

X2250

Total Gross profit

49500

Less:

Admin cost

12000

Variable markating (2/2250)

4500

Operating income as per absorption costing

33000

Operating income as per absorption costing =$33,000