Whitman Company has just completed its first year of operations. The company's absorption costing income statement for the year appears below Whitman Company Income Statement Sales (40,000 units x $45.1 per unit) $1,804,000 Cost of goods sold (40,000 units x $23 per unit) 920,000 Gross margin Selling and administrative expenses Net operating income 884,000 500,000 $384,000 The company's selling and administrative expenses consist of $300,000 per year in fixed expenses and $5 per unit sold in variable expenses. The $23 per unit product cost given above is computed as follows: $10 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($216,000 Absorption costing unit product cost 4 54,000 units) 4 $23