Tokless Inc.planned and manufactured 400,000 units of its single product in 2010,its first year of operations.Variable manufacturing costs were $50 per unit of production.Planned and fixed manufacturing costs were $800,000.Marketing and administrative costs (all fixed)were $600,000 in 2010.Tokless Inc.sold 195,000 units of product in 2010 at $65 per unit.Full costing operating income for 2010 is calculated to be:

Question

Quizplus · Accepted Answer

Total variable manufacturing costs = 400,000 units x $50 per unit = $20,000,000
Total fixed manufacturing costs = $800,000

Total manufacturing costs = $20,800,000

Total cost per unit = Total manufacturing costs / Number of units produced
= $20,800,000 / 400,000 units
= $52 per unit

Total cost of goods sold = $52 x 195,000 units
= $10,140,000

Operating income = Sales - Cost of goods sold - Marketing and administrative costs
= $65 x 195,000 units - $10,140,000 - $600,000
= $12,675,000 - $10,740,000
= $1,935,000

Therefore, the correct answer is C) $1,935,000.