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Scott company uses an absorption costing system based on standard costs. total variable manufacturing costs,...

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Accounting

Scott company uses an absorption costing system based on standard costs. total variable manufacturing costs, including direct materials, are $3.00 per unit. The standard production rate is 10 units per machine hour. Total budgeted and actual fixed manufacturing overhead costs are $420,000. fixed manufacturing overhead is allocate at $6.00 per machine hour ($420,000 / 70,000 machine hours of denominator level). Selling price is $6.00 per unit. variable operating costs, which are driven by units sold, are $1.25 peer unit. fixed operating costs are $140,000. beginning inventory is 24,000 units; ending inventory is 43,000. sales are 541,000 units. the same standard unit costs persisted throughout last year and this year. for simplicity, assume that there are no price, spending, and efficiency variances.

Compute operating income under absorption costing

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