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2. Adam Company has the following cost structure for Year 1: Variable Costs: Manufacturing $6 per...

2. Adam Company has the following cost structure for Year 1:

Variable Costs:

Manufacturing

$6 per unit produced

Selling and Administrative

$2 per unit produced

Fixed Costs

Manufacturing

$250,000 per year

Selling and Administrative

$120,000 per year

During Year 1, 100,000 units were produced and 95,000 units were sold. There was no beginning inventory. The selling price was $14 per unit. What is operating income for Year 1 using absorption costing?

  1. $200,000
  2. $212,500
  3. $202,500
  4. $190,000
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