HP 19 6 Saved Help Save &Exit; Submit Check my work 4 Santana Rey expects sales

Question

HP 19 6 Saved Help Save &Exit; Submit Check my work 4 Santana Rey expects sales of Business Solutions's line of computer workstation furniture to equal 300 workstations (at a sales price of $3,400 each) for 2018. The workstations' manufacturing costs include the following 3.75 points Direct materials Direct labor Variable overhead Fixed overhead $ 780 per unit 350 per unit 100 per unit $19,200 per year eBook Print References The selling expenses related to these workstations follow. Variable selling expenses Pixed selling expenses 45 per unit $3,900 per year Santana is considering how many workstations to produce in 2018. She is confident that she will be able to sell any workstations in her 2018 ending inventory during 2019. However, Santana does not want to overproduce as she does not have sufficient storage space for many more workstations

Explanation / Answer

1)

300

yes,Under absorption costing production volume and sales volume does effect net income as fixed manufacturing overhead is allocated on the basis of units produced.

2)

No,as under variable costing fixed manufacturing overhead is a period cost which is not allocated to product on the basis of units produced.

**unit cost under variable costing :780+350+100=1230

Production volume cost of goods sold 300 Workstations 320Workstations Direct material 780 780 Direct labor 350 350 Variable overhead 100 100 Fixed overhead 64     [19200/300] 60     [19200/320] cost of goods sold per unit 1294 1290 Number of workstations sold

300

320 Total cost of goods sold 388200 412800

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