Use the following data to answer the question Using absorption costing, what is

Question

Use the following data to answer the question

Using absorption costing, what is the net income in January if each unit sells for $3600?

Use the following data to answer the question

January February March Unit Data Beginning Inventory 0 ? ? Production 1300 1000 1000 Sales 800 800 1000 variable costs manufacturing cost per unit $900 $900 $900 marketing cost per unit sold $600 $600 $600 Fixed costs Manufacturing costs $450,000 $450,000 $450,000 Marketing costs $140,000 $140,000 $140,000

Using absorption costing, what is the net income in January if each unit sells for $3600?

Correct Answer: 1,263,077 Use the following data to answer the question Using absorption costing, what is the net income in January if each unit sells for $3600?

Explanation / Answer

Hi,

Sales (800*3600)
2880000 Less Manufacturing Cost (1300*900) 1170000
Manufacturing costs 450000
Less Cost of Ending Inventory (1170000 + 450000)*500/1300 (623076.9)
Gross Profit
1883077 Marketing Cost (800*600) 480000
Marketing costs 140000
Net Income
1263077

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