(3)

Beauty Supply Company manufactures shampoo. The supervisor has provided the following information and stated that standard costing is used for manufacturing, marketing, and administrative costs.

	January	February
Beginning inventory	0
Production	2,500	3,000
Sales	2,250	3,025
Other information:
Selling price		$20.00
Standard variable manufacturing cost/unit		$8.00
Standard variable market/admin. cost/unit		$4.00
Standard fixed manufacturing overhead cost/month		$40,000
Standard fixed market/admin. cost/month		$20,000
Budgeted denominator level per month (output units)		4,000

There were no beginning or ending inventories of materials or workinprocess.

What would Beauty Supply Company's operating income (loss) be for January and February, respectively, using the absorption costing approach?

A.

$(24,500) and $(26,050)

B.

$(22,000) and $(15,800)

C.

$18,000 and $24,200

D.

$(24,750) and $(33,275)

E.

$(15,750) and $(21,175)