Absorption Costing, Value of Ending Inventory, Operating Income

Pattison Products, Inc., began operations in October and manufactured 48,000 units during the month with the following unit costs:

Direct materials	$7.00
Direct labor	5.00
Variable overhead	2.50
Fixed overhead*	9.00
Variable marketing cost	2.20

^* Fixed overhead per unit = $432,000 / 48,000 units produced = $9

Total fixed factory overhead is $432,000 per month. During October, 45,800 units were sold at a price of $30.00, and fixed marketing and administrative expenses were $120,000.

Required:

1. Calculate the cost of each unit using absorption costing. Round your final answer to the nearest cent. $_____________ per unit

2. How many units remain in ending inventory? _________________ units

What is the cost of ending inventory using absorption costing? $________________

3. Prepare an absorption-costing income statement for Pattison Products, Inc., for the month of October.

Pattison Products, Inc.
Absorption-Costing Income Statement
For the Month of October
___________	$____________
___________	____________
Gross profit	$____________
Less:
____________	_____________
____________	_____________
Operating income	$____________

4. What if November production was 48,000 units, costs were stable, and sales were 49,000 units? What is the cost of ending inventory? $____________

What is operating income for November? $_____________