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    Compute the absorption-costing operating income

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    Compute the absorption-costing operating income for the following:

    B. Inventory: 0
    Production: 480,000 units
    Ending Inventory: 30,000 units
    Sales: 450,000 units
    Selling Price = $79.20

    Standard variable costs per unit:
    Direct Materials: $24.00
    Direct Manuf labor: $6.00
    Manufacturing Overhead: $14.40
    Variable Marketing: $4.80

    Standard Fixed costs:
    Manufacturing overhead: $10,800,000
    Marketing: $1,200,000

    The manufacturing overhead is allocated to each unit based on standard machine-hours. Each unit has a standard machining of 30 minutes.
    The denominator level is the master-budget capacity utilization of 500,000 units.

    All variances are recorded as a cost of the period in which they are incurred.

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    Solution Summary

    The solution computes the absorption-costing operating income with the given data in excel.

    $2.19

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