Beach Corporation, which produces a single product, budgeted the following costs for its first year of operations. These costs are based on a budgeted volume of 30,000 towels produced and sold:

Direct materials	$	96,000
Direct labor	$	48,000
Variable manufacturing overhead	$	72,000
Fixed manufacturing overhead	$	60,000
Variable selling and administrative expenses	$	12,000
Fixed selling and administrative expenses	$	36,000

During the first year of operations, Beach Corporation actually produced 30,000 towels but only sold 24,000 towels. Actual costs did not fluctuate from the cost behavior patterns described above. The 24,000 towels were sold for $16 per towel. Assume that direct labor is a variable cost.

Under absorption costing, what is Beach Corporation's actual net operating income for its first year?

Garrison 16e Rechecks 2017-08-09, 2017-10-31

Multiple Choice

• $115,200

• $124,800

• $117,600

• $60,000