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 11,268 units of
product, and sold 8,939 units. The selling price of each unit was $30. Variable manufacturing costs were $5 per unit, and variable selling and
administrative costs were $2 per unit. Fixed manufacturing costs were $27,851 and fixed selling and administrative costs were $7,141.
What would be the Collins Corporations Net income for 2007 using absorption costing?

P.S. Please break it down. Thank you

Explanation / Answer

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

Variable manufacturing cost of 11268 unit = 56340

Fixed Manufacturing cost = 27851

Total Manufacturing cost = 84191

Less: Ending inventory of finished goods = 84191/11268 * 2329 = $17401.56

Cost of Good Sold = $66,789.44

Add: Variable Selling & admin overhead = 2*8939 =$17878

Add: Fixed Selling & admin overhead = $7141

Cost of sale =$91808.44

Sale = $268170

Net Income = $176361.56

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