Variable Costing, Absorption Costing

During its first year of operations, Snobegon, Inc. $($located in Lake Snobegon, Minnesota$),$ produced $40,600$ plastic snow scoops. Snow scoops are oversized shovel$-$type scoops that are used to push snow away. Unit sales were $38,300$ scoops. Fixed overhead was applied at $$0\mathrm{.}70$ per unit produced. Fixed overhead was underapplied by $$3,000.$ This fixed overheed variance was closed to Cost of Goods Sold. There was no variable overhead variance. The results of the year's cperations are as folluws $($on an absorption$-$costing basis$)$:

Sales units @ $$20)$

Less: Cost of goods sold

Gross margin

Less: Selling and administrative expenses $($all fixed$)$

Operating income

$\backslash$table$[[$$$765,000$