Question

Santana Rey expects sales of Business Solutions's line of computer workstation furniture to equal 300 workstations (at a sales $3,500 each) for 2018. The workstations' manufacturing costs include the following Direct materials Direct labor Variable overhead Fixed overhead 770 per unit $ 300 per unit 5 60 per unit $28,880 per year The selling expenses related to these workstations follow Variable selling expenses Fixed selling expenses s 50 per unit $3,200 per year Santana is considering how many workstations to produce in 2018. She is confident that she will be able to sell any workstation 2018 ending inventory during 2019. However, Santana does not want to overproduce as she does not have sufficient storage sp many more workstations. Required: 1. Complete the following income statements using absorption costing Production volume 300 320 Cost of goods sold workstations workstations

Answer 1

Solution 1:

Computation of Cost of goods sold
Particulars	Production Volume
	300 Workstations	320 Work stations
Direct material	$770.00	$770.00
Direct labor	$300.00	$300.00
Variable overhead	$60.00	$60.00
Fixed overhead	$96.00	$90.00
Cost per unit	$1,226.00	$1,220.00
Nos of units sold	300	300
Cost of goods sold	$367,800.00	$366,000.00

Business solution
Absorption costing income statement
Particulars	Production Volume
	300 Workstations	320 Work stations
Sales	$1,050,000.00	$1,050,000.00
Cost of goods sold	$367,800.00	$366,000.00
Gross Profit	$682,200.00	$684,000.00
Operating Expenses:
Variable selling expenses	$15,000.00	$15,000.00
Fixed Selling expenses	$3,200.00	$3,200.00
Net Operating Income	$664,000.00	$665,800.00