Fresco Bottling Works manufactures glass bottles. January began with 10,000 units carried at $71,500. An additional 55,000 units were produced that month. February had production of 50,000 units. Fixed manufacturing costs totalled $192,500 in January and $180,000 in February. Sales for both months totalled 45,000 units with variable manufacturing costs of $4 per unit. Selling and administrative costs were $0.35 per unit variable and $70,000 fixed. The selling price was $11 per unit. Inventory moves on a first-in, first-out basis.
Required:
Compute the operating income for both months using absorption costing.

Question

Quizplus · Accepted Answer

The Answer of Fresco Bottling Works manufactures glass bottles. January began with 10,000 units carried at $71,500. An additional 55,000 units were produced that month. February had production of 50,000 units. Fixed manufacturing costs totalled $192,500 in January and $180,000 in February. Sales for both months totalled 45,000 units with variable manufacturing costs of $4 per unit. Selling and administrative costs were $0.35 per unit variable and $70,000 fixed. The selling price was $11 per unit. Inventory moves on a first-in, first-out basis.
Required:
Compute the operating income for both months using absorption costing.

Fresco Bottling Works Manufactures Glass Bottles