Question
Houston,Inc., planned and actually manufactured 200,000 units of its single product in 2017, its first year of operation. Variable manufacturing cost was $ 24 per
Houston,Inc., planned and actually manufactured 200,000 units of its single product in
2017, its first year of operation. Variable manufacturing cost was $ 24 per unit produced. Variable operating (nonmanufacturing) cost was $9 per unit sold. Planned and actual fixed manufacturing costs were $600,000.Planned and actual fixed operating (nonmanufacturing) costs totaled $370,000. Houston sold 100,000 units of product at $ 45 per unit
Houstons 2017 operating income using absorption costing is
(a) $530,000,
(b) $230,000,
(c) $600,000,
(d) $900,000,
(e) none of these. Show supporting calculations.
Absorption costing
Revenues 4500000
Cost of goods sold:
Beginning inventory 0
Variable manufacturing costs
Allocated fixed manufacturing costs 600,000
Cost of goods available for sale
Deduct ending inventory
Cost of goods sold
Gross margin
Variable operating costs
Fixed operating costs
Operating income
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