A manufacturer reports direct materials of $10 per unit, direct labor of $4 per unit, and variable overhead of $6 per unit. Fixed overhead is $240,000 per year, and the company estimates sales of 24,000 units at a sales price of $50 per unit for the year. The company has no beginning finished goods inventory. If the company uses absorption costing, compute gross profit assuming 30,000 units are produced and 24,000 units are sold.

Multiple Choice

• $1,200,000.

• $672,000.

• $720,000.

• $528,000.

• $480,000.