Question

Marigold Corp. sells its product for $5600 per unit. Variable costs per unit are: manufacturing, $3000,...

Marigold Corp. sells its product for $5600 per unit. Variable costs per unit are: manufacturing, $3000, and selling and administrative, $25. Fixed costs are: $18000 manufacturing overhead, and $24000 selling and administrative. There was no beginning inventory at 1/1/18. Production was 20 units per year in 2018–2020. Sales were 20 units in 2018, 16 units in 2019, and 24 units in 2020. Income under absorption costing for 2020 is

$16200.

$11400.

$19800.

$15650.

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Answer #1
Correct option is: $19,800
Sales Revenue = $5600 X 24 = $       1,34,400
Less: Variable cost = ($3000 + $25) X 24 = $           72,600
Less: Fixed cost = ($18000 + $24000) = $           42,000
Income under Absorption costing for Year 2020 = $           19,800
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