Zahra's Decorative produces and sells a decorative pillow for $97.50 per unit. In the first month of operation, 2,000 units were produced, and 1,750 units were sold. Actual fixed costs are the same as the amount budgeted for the month. Other information for the month includes: Variable manufacturing costs (DM, DL, Var Overhead)$22.10 per unitVariable marketing costs (Commission, shipping, supplies)$ 3.90 per unitFixed manufacturing costs$13.00 per unitAdministrative expenses, all fixed$19.50 per unitEnding inventories: RM Inventory-0-WIP Inventory-0-Finished goods Inventory250 units Compute the operating income using absorption costing. For 2019, Kim, Inc., had production of 200,000 units and sales of 160,000 units. Selling price is $6 per unit. There was no beginning inventory. Other information for the year included: Direct manufacturing labor$228,000Variable manufacturing overhead120,000Direct materials180,000Variable selling expenses144,000Fixed administrative expenses96,000Fixed manufacturing overhead216,000 Compute net income under absorption costing.

The approach of management accounting known as "absorption costing," which is also known as "full…

Answered: Zahra's Decorative produces and sells a…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter10: Short-term Decision Making

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Zahra's Decorative produces and sells a decorative pillow for $97.50 per unit. In the first month of operation, 2,000 units were produced, and 1,750 units were sold. Actual fixed costs are the same as the amount budgeted for the month. Other information for the month includes:

Variable manufacturing costs (DM, DL, Var Overhead)	$22.10 per unit
Variable marketing costs (Commission, shipping, supplies)	$ 3.90 per unit
Fixed manufacturing costs	$13.00 per unit
Administrative expenses, all fixed	$19.50 per unit
Ending inventories:
RM Inventory	-0-
WIP Inventory	-0-
Finished goods Inventory	250 units

Compute the operating income using absorption costing.

For 2019, Kim, Inc., had production of 200,000 units and sales of 160,000 units. Selling price is $6 per unit. There was no beginning inventory. Other information for the year included:

Direct manufacturing labor	$228,000
Variable manufacturing overhead	120,000
Direct materials	180,000
Variable selling expenses	144,000
Fixed administrative expenses	96,000
Fixed manufacturing overhead	216,000