7 8 5

During its first year of operations, the McCormick Company incurred the following minnufacturing costs: Direct materials, $5 per unit, Direct labor, $3 per unit, Variable overhead, $4 per unit, and Fixed overhead, $250,000. The company produced 25,000 units, and sold 20,000 units, leaving 5,000 units in inventory at year-end. Income calculated under variable costing is determined to be $315,000. How much income is reported under absorption costing? $565,000 Grason Corporation is preparing a budgeted balance sheet for 2018. The retained earnings balance at December 31,2017 was $533,500. The 2015 budgeted income statement shows expected net income of $112,000. The company expects to declare dividends during 2018 amounting to $40,000. The expected balance in retained earnings on the 2018 budgeted balance sheet is: $493.500. $605,500 $645,500 $533,500. $685,500