Question

During 2021, its first year of operations, XYZ Company produced 25,000
units and sold 19,000 units. During 2022, XYZ Company produced 30,000
units and sold 34,000 units. The following information was taken from
XYZ's accounting records for 2021 and 2022:

                                               2021            2022
Direct materials cost per unit ............    $14             $17
Direct labor cost per unit ................    $20             $24
Variable overhead cost per unit ...........    $9              $11
Variable selling & admin cost per unit ....    $6              $8
Fixed overhead (total cost) ...............    $150,000        $225,000
Fixed selling & admin (total cost) ........    $103,000        $119,000

Assume the selling price of XYZ Company's product was $75 per unit for
both years.

Calculate XYZ Company's 2022 net income using absorption costing.
Assume XYZ Company employs a LIFO inventory cost flow assumption. 

Answer 1

Please hit LIKE button if this helped. For any further explanation, please put your query in comment, will get back to you.
2020 Income Statement
Sales		$       2,550,000
Less: Cost of Goods Sold		$       1,960,000
Gross Margin		$           590,000
Less: Selling and Admin Expenses-Variable	8*34000	$           272,000
Less: Selling and Admin Expenses-Fixed		$           119,000
Income from operations		$           199,000

Cost of Goods Sold working:

	2021			2022
Beginning Raw Material Inventory	$                                     -			$             -
Purchases	$                          350,000			$ 510,000
Raw maaterial Available	$                          350,000			$ 510,000
Ending Raw Material Inventory	$                                     -			$             -
Raw Material used		$ 350,000			$ 510,000
Labor		$ 500,000			$ 720,000
Overhead Applied		$ 375,000			$ 555,000
Total Manufacturing Cost			$ 1,225,000			$   1,785,000
Beginning work in process inventory			$                -			$                   -
Total Work in process inventory			$ 1,225,000			$   1,785,000
Ending work in process inventory			$                -			$                   -
Cost of Goods manufactured			$ 1,225,000			$   1,785,000
Beginning Finished goods			$                -			$       294,000
Goods Available			$ 1,225,000			$   2,079,000
Ending Finished Goods	1225000/25000*6000		$   -294,000			$     -119,000	1785000/30000*2000
Cost of Goods Sold			$     931,000			$   1,960,000