Dillon Company incurred the following costs while producing 600 units: direct materials, $ 9 per unit;...
Dillon Company incurred the following costs while producing 600 units: direct materials, $ 9 per unit; direct labor, $ 21 per unit; variable manufacturing overhead, $ 17 per unit; total fixed manufacturing overhead costs, $ 13,200; variable selling and administrative costs, $7 per unit; total fixed selling and administrative costs, $ 8,400. There are no beginning inventories. What is the operating income using absorption costing if 600 units are sold for $ 150 each?
A. 15,840
B. 20,460
C. 36,000
D. 37,440
I need assistance working this problem out. When I work it out I come up with the number 41,400 but that is not an option of what is given.
Homework Answers
Income statement (Absorption costing)
|
Sales (600 x 150) (i) |
90,000 |
|
Production costs: |
|
|
Direct materials (600 x 9) |
5,400 |
|
Direct labor (600 x 21) |
12,600 |
|
Variable manufacturing overheads (600 x 17) |
10,200 |
|
Fixed manufacturing overheads |
13,200 |
|
Cost of goods produced |
|
|
+ Variable Selling and administrative overheads (600 x 7) |
4,200 |
|
+ Fixed Selling and administrative overheads |
8,400 |
|
Total cost (ii) |
54,000 |
|
Profit (i) - (ii) |
36,000 |
Hence, correct option is (c)
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