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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

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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 (38,000 units $44.10 per unit) Cost of goods sold (38,000 units $25 per unit) $1,675,800 950,000 Gross margin Selling and administrative expenses 725,800 437,000 Net operating income $ 288,800 The company's selling and administrative expenses consist of $285,000 per year in fixed expenses and $4 per unit sold in variable expenses. The $25 per unit product cost given above is computed as follows: $12 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($255,000 + 51,000 units) 3 Absorption costing unit product cost $ 25

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