Leheny Corporation manufactures and sells one product. The following information pertains to the company's first year of operations: The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 55,000 units and sold 50,000 units. The company's only product is sold for $238 per unit.
Assume that the company uses an absorption costing system that assigns $21 of direct labor cost and $58 of fixed manufacturing overhead to each unit that is produced. The net operating income under this costing system is:
A) $580,000
B) $1,400,000
C) $1,005,000
D) $1,110,000

Question

Leheny Corporation manufactures and sells one product. The following information pertains to the company's first year of operations:  The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 55,000 units and sold 50,000 units. The company's only product is sold for $238 per unit.
Assume that the company uses an absorption costing system that assigns $21 of direct labor cost and $58 of fixed manufacturing overhead to each unit that is produced. The net operating income under this costing system is:
A) $580,000 
B) $1,400,000 
C) $1,005,000 
D) $1,110,000

Quizplus · Accepted Answer

Absorption costing unit product cost:
 11eacbfc_c88a_11a7_8ffe_37027e547d98_TB7552_00 Absorption costing income statement:
 11eacbfc_c88a_11a8_8ffe_afc451bade5e_TB7552_00

Leheny Corporation Manufactures and Sells One Product