The Collins Corporation just started business in January of 2007. They had no be

Question

The Collins Corporation just started business in January of 2007. They had no beginning inventories. During 2007 they manufactured 11,021 units of product, and sold 8,263 units. The selling price of each unit was $24. Variable manufacturing costs were $5 per unit, and variable selling and administrative costs were $1 per unit. Fixed manufacturing costs were $29,645 and fixed selling and administrative costs were $8,114.

What would be the Collins Corporations Net income for 2007 using absorption costing

Explanation / Answer

Sales (8263*24) = 198312 Manufacturing Cost = VC + FC = (11021*5)+29645 = 84750 Less: Closing Stock = (84750*2758/11021) = 21209 Cost of Goods Sold = 84750-21209 = 63541 Gross Margin = 198312-63541 = 134771 Less: Sales Cost = (8263*1)+8114 = 16377 Net Income = 134771-16377 = 118394

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