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We are preparing budgets for our new company's first two years of operations. We will make and sell a single product. Selected data about our
We are preparing budgets for our new company's first two years of operations. We will make and sell a single product. Selected data about our first two years of operations are below: Year 1 Year 2 Selling price $98 $98 per unit Unit variable costs: Direct materials $17 $17 per unit Direct labor $37 $37 Variable overhead $11 $11 per unit Fixed selling & administrative expenses $178,000 $178,000 per year Production 24,000 24,000 units Sales 17,000 23,000 units per unit Absorption costing net operating income $231,596 $376,159 We do not plan to have any variable selling & administrative expenses. We expect our annual fixed overhead to be the same in year-1 and year-2. What is our budgeted annual fixed overhead
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