10. A company produces a single product. Last year, fixed manufacturing overhead was $30,000, variable production costs were $48,000, fixed selling and administration costs were $20,000, and variable selling expenses were $9,600. There was no beginning inventory. During the year, 3,000 units were produced and 2,400 units were sold at a price of $40 per unit.

Under absorption costing, gross margin would be:

$33,600

$27,600

$49,920

$57,600

Under absorption costing, net operating income (loss) would be:

A profit of $4,000

A profit of $8,920

A profit of $2,120

A loss of $2,000