Last year, Fabre Company produced 20,000 units and sold 18,000 units at a price of $12. Costs for last year were as follows:
Direct materials 25,000
Direct labor 35,000
Variable factory overhead 12,000
Fixed factory overhead 37,000
Variable selling expense 9,000
Fixed selling expense 7,500
Fixed administrative expense 15,500
Fixed factory overhead is applied based on expected production. Last year, Fabre expected to produce 20,000 units.
What is operating income for last year under absorption costing?
Total Revenue = 18000*12 = $216,000
Total Period Cost is as follows...
The solution computes Operating income for Fabre Company.