Andy’s Water Pets Inc. makes 100-gallon plexiglass aquariums. They reported the following financial information for last year: Direct labor: 9,000 hours @ $20 per hr. Production manager salary: $75,000 Factory rent: $36,000 Equipment maintenance: $15,000 (considered a variable expense) Equipment depreciation: $15,000 Production for the year: 12,000 units Total Revenue: $1,500,000 Total aquariums sold during the period: 15,000 units Operating Income under variable costing (after non-production expenses): $306,000 Assume that the fixed costs were the same on a per-unit basis during the prior period. What would Operating Income be under absorption costing? (Round per-unit costs to the nearest cent.) Select one: a. $341,235 b. None of these options are correct. c. $270,765 d. $337,500 e. $274,500
Andy’s Water Pets Inc. makes 100-gallon plexiglass aquariums. They reported the following financial information for last year: Direct labor: 9,000 hours @ $20 per hr. Production manager salary: $75,000 Factory rent: $36,000 Equipment maintenance: $15,000 (considered a variable expense) Equipment depreciation: $15,000 Production for the year: 12,000 units Total Revenue: $1,500,000 Total aquariums sold during the period: 15,000 units Operating Income under variable costing (after non-production expenses): $306,000 Assume that the fixed costs were the same on a per-unit basis during the prior period. What would Operating Income be under absorption costing? (Round per-unit costs to the nearest cent.) Select one: a. $341,235 b. None of these options are correct. c. $270,765 d. $337,500 e. $274,500
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Andy’s Water Pets Inc. makes 100-gallon plexiglass aquariums. They reported the following financial information for last year:
| Direct labor: | 9,000 hours @ $20 per hr. |
| Production manager salary: | $75,000 |
| Factory rent: | $36,000 |
| Equipment maintenance: | $15,000 (considered a variable expense) |
| Equipment depreciation: | $15,000 |
| Production for the year: | 12,000 units |
| Total Revenue: | $1,500,000 |
| Total aquariums sold during the period: | 15,000 units |
| Operating Income under variable costing (after non-production expenses): | $306,000 |
Assume that the fixed costs were the same on a per-unit basis during the prior period.
What would Operating Income be under absorption costing? (Round per-unit costs to the nearest cent.)
Select one:
a. $341,235
b. None of these options are correct.
c. $270,765
d. $337,500
e. $274,500
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