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