Assume the following information for a company that produced and sold 10,000 units during Year 1. It also produced 15,000 units and sold 12,000 units during Year 2, while producing 12,000 units and selling 15,000 units in Year 3. Particulars Per unit per year Selling price $240 Direct materials $79 Direct labor $59 Variable manufacturing overhead $10 Sales commission $11 Fixed manufacturing overhead $450,000 Fixed selling and administrative expense $250,000 Using absorption costing, what is the net operating income for Year 3? a. $415,000 b. $402,500 c. $425,000 d. $69,000

Assume the following information for a company that produced and sold 10,000 units during Year 1. It also produced 15,000 units and sold 12,000 units during Year 2, while producing 12,000 units and selling 15,000 units in Year 3. Particulars Per unit per year Selling price $240 Direct materials $79 Direct labor $59 Variable manufacturing overhead $10 Sales commission $11 Fixed manufacturing overhead $450,000 Fixed selling and administrative expense $250,000 Using absorption costing, what is the net operating income for Year 3? a. $415,000 b. $402,500 c. $425,000 d. $69,000

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter2: Basic Cost Management Concepts

Section: Chapter Questions

Problem 22E: Ellerson Company provided the following information for the last calendar year: During the year,...

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Ellerson Company provided the following information for the last calendar year: During the year, direct materials purchases amounted to 278,000, direct labor cost was 189,000, and overhead cost was 523,000. During the year, 100,000 units were completed. Required: 1. Calculate the total cost of direct materials used in production. 2. Calculate the cost of goods manufactured. Calculate the unit manufacturing cost. 3. Of the unit manufacturing cost calculated in Requirement 2, 2.70 is direct materials and 5.30 is overhead. What is the prime cost per unit? Conversion cost per unit?
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