Franz began business at the start of this year and had the following costs: vari

Question

Franz began business at the start of this year and had the following costs: variable manufacturing cost per unit, $9; fixed manufacturing costs, $60,000; variable selling and administrative costs per unit, $2; and fixed selling and administrative costs, $220,000. The company sells its units for $45 each. Additional data follow.

Planned Production in units 10,000

Actual Production in units%u2026..10,000

Number of units sold 8,500

There were no variances.

The net income (loss) under absorption costing is:

A. (7500)

B. 9,000

C. 15,00

D. 18,000

E. Some other amount

(Use #19 Question to answer below) The net income (loss) under variable costing is:

Same answer choices as above.

Explanation / Answer

Answer is D. $ 18000 Construct The Absorption Costing Unit Product Cost Variable Manufacturing Cost 9 Fixed Manufacturing overheads 6.00 (60000/10000 units) Absorption costing unit prroduct cost 15.00 Construct the Absorption Costing Income Statement Sales $382,500 Cost of Goods sold 127500 Gross Margin $255,000 Selling and distribution expense 237,000 Net operating income 18,000

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