1. Etters Manufacturing Company has provided the following financial data for its most recent month.

Unit Selling Price	$18
Units in beginning inventory	0
Units produced	10,000
Units sold	9,500
Variable costs per unit:
Direct materials	$6
Direct labor	$4
Manufacturing overhead	$3
Selling and administrative costs	$1
Fixed costs:
Manufacturing overhead	$12,000
Selling and administrative costs	$8,000

Required:

Prepare an income statement using an absorption costing format.

LO2

Solution:

Sales $171,000

Less cost of goods sold:

Variable manufacturing $123,500

Fixed manufacturing 11,400 134,900

Gross profit 36,100

Less selling and administrative expenses

Variable 9,500

Fixed 8,000 17,500

Net operating income $ 18,600

How is the 11,400 (fixed manufacturing) calculated??