Question

Required information SB Advanced Company reports the following... [The following information applies to the questions displayed below.] Advanced Company reports the following information for the current year. All beginning inventory amounts equaled $0 this year. Units produced this year 30,000 units Units sold this year 18,000 units Direct materials $ 14 per unit Direct labor $ 16 per unit Variable overhead $ 90,000 in total Fixed overhead $ 150,000 in total MC Qu. 95 Given Advanced Company's data... Given Advanced Company's data, and the knowledge that the product is sold for $61 per unit and operating expenses are $250,000, compute the net income under absorption costing.

Answer 1

$164,000

Step-by-step explanation:

Cost per unit = 14 + 16+ ($90,000/30,000) + (150,000/30,000)

=30+3+5

= 38 per unit

Gross profit = Sales - Cost of Goods Sold

= (61*$18,000) - (38*$18,000)

=$1,098,000-$684,000

= $414,000

Net income = $414,000 - 250,000 = $164,000

The net income under absorption costing is

$164,000

Answer 2

Answer: $164,000

Step-by-step explanation:

Given the following ;

All beginning inventory amounts equaled $0.

Units produced = 30,000 units Units sold = 18,000 units

Direct materials = $ 14 per unit Direct labor = $ 16 per unit

Sales price = $61

Variable overhead=$90,000 in total Fixed overhead = $150,000 in total

Under absorption costing, overhead cost is added to the production cost.

Therefore,

Variable overhead cost per unit = $90,000 ÷ $30,000 = $3 per unit

Fixed overhead cost per unit = $150,000 ÷ 30,000 = $5 per unit

Total cost per unit = $(14 + 16 + 3 + 5) = $38

Total unit sold × total cost per unit

18,000 × $38 = $684,000

Total units sold × price per unit

$18,000 × $61 = $1,098,000

$1,098,000 - 684,000 = $414,000

Net income = $414,000 - operating expenses

Net income = $414,000 - $250,000 = $164,000