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Cagney Industries has the following cost information for the year just ended: Direct materials $ 1.00 per unit Direct labor $ 2.00 per unit Variable manufacturing overhead $ 1.50 per unit Fixed manufacturing overhead $ 30,000 Variable selling and administrative cost $ 0.50 per unit Fixed selling and administrative cost $ 25,000 During the year, Cagney produced 6,000 units, out of which 5,400 were sold for $20 each. What is net income under absorption costing

Sagot :

Ayokenny2001idn

Answer:

$29,000

Explanation:

First, we need to calculate the unitary cost value

Unit cost value = ($1 + $2 + $1.5) + $30,000/6,000 = $9.5

Sales = 5,400 × $20 = $108,000

Less:

COGS = $9.5 × 5,400 = ($51,300)

Gross profit = $56,700

Less:

Total administrative costs = ($0.5 × 5,400) + $25,000 = ($27,700)

Net operating income = $29,000

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