Santana Rey expected sales of her line of computer workstation furniture to equa

Question

Santana Rey expected sales of her line of computer workstation furniture to equal 300 workstations (at a sales price of $3,200) for 2012. The workstations' manufacturing costs include the following. Direct materials $ 710 per unit Direct labor $ 320 per unit Variable overhead $ 90 per unit Fixed overhead $ 24,000 per year The selling expenses related to these workstations follow. Variable selling expenses $ 35 per unit Fixed selling expenses $ 3,800 per year Santana is considering how many workstations to produce in 2012. She is confident that she will be able to sell any workstations in her 2012 ending inventory during 2013. However, Santana does not want to overproduce as she does not have sufficient storage space for many more workstations. Required: 1. Compute Business Solutions' absorption costing income assuming. (Omit the "$" sign in your response.) a. 300 Workstations ________ $ b. 320 Workstations ________ $ 2. Compute Business Solutions

Explanation / Answer

Hi,

Please find the answers as follows:

Part B:

Thanks.

Absorbtion Costing 300 Units Sales 900000 Less Manufacturing Costs
Direct materials (300*790) 237000 Direct abor (300*310) 93000 Variable overhead (300*100) 30000 Fixed overhead 19200 Gross Margin 520800 Less Selling and Administration Expenses
Variable selling expenses (300*40) 12000 Fixed selling expenses 3500 Net Income 505300

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