Required information The following information applies to the questions displaye

Question

Required information The following information applies to the questions displayed below.) began operations at the beginning of the current year. One of the company's products, a refrigeration element, sells for $195 per unit Information related to the current year's activities follows. Variable costs per unit: Direct material Direct labor Manufacturing overhead 10 37 Annual fixed costs: Manufacturing overhead Selling and administrative $600,800 866,eee Production and sales activity: Production (units) Sales (units) 24,800 28,800 Mason carries its finished goods inventory at the average unit cost of production and is subject to a 30 percent income tax rate. There was no work in process at year-end. 2. Compute Mason's net income for the current year ended December 31.

Explanation / Answer

Less:Tax @ 30%

Net income

216000

504000

2 Income statement Sales (20000*195) 3900000 Less: Cost of goods sold (Note:1) 2320000 Gross profit 1580000 Less:Selling and admoinistrative 860000 Net income before taxes 720000

Less:Tax @ 30%

Net income

216000

504000

Notes: 1. Cost of goods sold Total production cost Direct material (24000*10) 240000 Direct labor (24000*37) 888000 Manufacturing overhead Variable (24000*44) 1056000 Fixed 600000 Total production cost   (a) 2784000 Number of unts produced   (b) 24000 Average unit cost    C=(a)/(b) 116 Number of units sold (d) 20000 Cost of goods sold C*(d) 2320000

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