Megredy Company prepared the following absorption-costing income statement for the year ended May 31, 20x4.

Sales (16,000 units) $320,000

Cost of goods sold 216,000

Gross margin $104,000

Selling and administrative expenses 46,000

Operating income $ 58,000

Additional information follows: Selling and administrative expenses include $1.50 of variable cost per unit sold. There was no beginning inventory, and 17,500 units were produced. Variable manufacturing costs were $11 per unit. Actual fixed costs were equal to budgeted fixed costs.

Required:

Prepare a variable-costing income statement for the same period.

Answer:

Sales $320,000

Variable expenses:

Manufacturing cost of goods sold¹ $176,000

Selling and administrative² 24,000 200,000

Contribution margin $ 120,000

Fixed expenses:

Fixed factory overhead³ $43,750

Fixed selling and administrative⁴ 22,000 65,750

Operating income $ 54,250

For (3) and (4), how did you get the fixed factory overhead and fixed selling and admin.?? (I know the answer, but need clearly explanation) Which formula did you implied?? THANK YOU