Zahra's Decoratives produces and sells a decorative pillow for $100 per unit. In the firs month of operation, 1,800 units were produced and 1,750 units were sold. Budgeted production was 2,000 units. Actual fixed costs are the same as the amount budgeted for the month. Other information for the month includes: Variable manufacturing costs$22.10 per unit

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Zahra's Decoratives produces and sells a
decorative pillow for $100 per unit. In the first
month of operation, 1,800 units were
produced and 1,750 units were sold.
Budgeted production was 2,000 units. Actual
fixed costs are the same as the amount
budgeted for the month. Other information
for the month includes:
Variable manufacturing costs$22.10 per unit
Variable marketing costs$ 3.90 per unit
Fixed manufacturing costs$13.00 per unit
Administrative expenses, all
fixed
$19.50 per
unit
Ending inventories:
Direct materials-0-
WIP-0-
Finished goods250 units
What is the operating income using
absorption costing?
a. $65,125
b. $60,125
c. $65,000
d. $65,150
Transcribed Image Text:Zahra's Decoratives produces and sells a decorative pillow for $100 per unit. In the first month of operation, 1,800 units were produced and 1,750 units were sold. Budgeted production was 2,000 units. Actual fixed costs are the same as the amount budgeted for the month. Other information for the month includes: Variable manufacturing costs$22.10 per unit Variable marketing costs$ 3.90 per unit Fixed manufacturing costs$13.00 per unit Administrative expenses, all fixed $19.50 per unit Ending inventories: Direct materials-0- WIP-0- Finished goods250 units What is the operating income using absorption costing? a. $65,125 b. $60,125 c. $65,000 d. $65,150
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