Question

Naples Company produced 650,000 units and sold 500,000 units. Their unit selling price is $10. Cost of goods sold is $6 per unit. Fixed selling expenses are $10,000 and variable selling and administrative expenses are $3 per unit. Compute Naple's net income under absorption costing.

Answer 1

Net operating profit= $490,000

Step-by-step explanation:

Giving the following information:

Naples Company produced 650,000 units and sold 500,000 units. Their unit selling price is $10. The cost of goods sold is $6 per unit. Fixed selling expenses are $10,000 and variable selling and administrative expenses are $3 per unit.

Income statement:

Revenue= 500,000*10= 5,000,000

COGS= 500,000*6= 3,000,000

Gross profit= 2,000,000

Fixed expenses= 10,000

Variable selling nd administrative= (500,000*3)= 1,500,000

Net operating profit= $490,000