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Etters Manufacturing Company has provided the following financial data for its most recent month. Unit Selling Price $18 Units...

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Question

Accounting

  1. Etters Manufacturing Company has provided the followingfinancial data for its most recent month.

Unit Selling Price

$18

Units in beginning inventory

0

Units produced

10,000

Units sold

9,500

Variable costs per unit:

   Direct materials

$6

   Direct labor

$4

   Manufacturingoverhead

$3

   Selling andadministrative costs

$1

Fixed costs:

   Manufacturingoverhead

$12,000

   Selling andadministrative costs

$8,000

Required:

Prepare an income statement using anabsorption costing format.

LO2

Solution:

Sales                                                                            $171,000

Less cost of goods sold:

   Variablemanufacturing                      $123,500

   Fixedmanufacturing                               11,400            134,900

Grossprofit                                                                      36,100

Less selling and administrativeexpenses

   Variable                                                   9,500

   Fixed                                                        8,000               17,500

Net operatingincome                                                   $  18,600

How is the 11,400 (fixedmanufacturing) calculated??

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