Beach Corporation, which produces a single product, budgeted the following costs for its first year of operations. These costs are based on a budgeted volume of 30,000 towels produced and sold: During the first year of operations, Beach Corporation actually produced 30,000 towels but only sold 24,000 towels. Actual costs did not fluctuate from the cost behavior patterns described above. The 24,000 towels were sold for $16 per towel. Assume that direct labor is a variable cost.
Under absorption costing, what is Beach Corporation's actual net operating income for its first year?
A) $60,000
B) $115,200
C) $117,600
D) $124,800

Question

Beach Corporation, which produces a single product, budgeted the following costs for its first year of operations. These costs are based on a budgeted volume of 30,000 towels produced and sold:  During the first year of operations, Beach Corporation actually produced 30,000 towels but only sold 24,000 towels. Actual costs did not fluctuate from the cost behavior patterns described above. The 24,000 towels were sold for $16 per towel. Assume that direct labor is a variable cost.
Under absorption costing, what is Beach Corporation's actual net operating income for its first year?
A) $60,000 
B) $115,200 
C) $117,600 
D) $124,800

Quizplus · Accepted Answer

Unit product cost under absorption costing:
 11eacbfc_c6c3_0c5c_8ffe_1b9d24b4c466_TB7552_00 Absorption costing income statement
 11eacbfc_c6c3_0c5d_8ffe_7595e8f24a46_TB7552_00

Beach Corporation, Which Produces a Single Product, Budgeted the Following