Use the following information for items
Green Company sells its product for $11,000 per unit.Variable costs per unit are: manufacturing, $6,000; and selling and administrative, $125.Fixed costs are: $30,000 manufacturing overhead, and $40,000 selling and administrative.There was no beginning inventory at 1/1/10.Production was 20 units per year in 2010 - 2012.Sales were 20 units in 2010, 16 units in 2011, and 24 units in 2012.
-Income under absorption costing for 2011 is
A)$ 8,000.
B)$14,000.
C)$16,000.
D)$22,000.

Question

Use the following information for items 
Green Company sells its product for $11,000 per unit.Variable costs per unit are: manufacturing, $6,000; and selling and administrative, $125.Fixed costs are: $30,000 manufacturing overhead, and $40,000 selling and administrative.There was no beginning inventory at 1/1/10.Production was 20 units per year in 2010 - 2012.Sales were 20 units in 2010, 16 units in 2011, and 24 units in 2012.
-Income under absorption costing for 2011 is
A)$ 8,000.
B)$14,000.
C)$16,000.
D)$22,000.

Quizplus · Accepted Answer

Income under absorption costing for 2011 is $14,000. This is calculated as follows:Sales revenue: 16 units x $11,000 = $176,000Variable costs: 16 units x ($6,000 + $125) = $99,200Fixed costs: $30,000 + $40,000 = $70,000Total costs: $99,200 + $70,000 = $169,200Income: $176,000 - $169,200 = $14,000

Use the Following Information for Items