Respuesta :
The income (loss) under absorption costing is $7,500, which is mentioned in option C for the Favaz began business.
Explanation:
The given is,
Variable manufacturing cost per unit - $9
Fixed manufacturing costs - $60,000
Variable selling and administrative costs per unit - $2
Fixed selling and administrative costs - $220,000
Sells its units for $45 each
Planned and actual production in units 10,000
Number of units sold 8,500
Step:1
Total variable cost = No.of units × Variable cost per unit
= 10,000 × 9
= $90,000
Total variable selling and administrative cost,
= No.of units × Variable selling and administrative cost per unit
= 10,000 × 2
= $20,000
Total cost = Total variable cost + Fixed cost + Total variable selling
and administrative cost + Fixed selling and
administrative costs + Fixed manufacturing costs
= 90,000 + 20,000 + 220,000 + 60,000
= 390,000
Total cost = $390,000
Step:2
Total sales cost = No.of units to be sold × Sales cost per unit
= 8,500 × 45
= 382,500
Total sales cost = $382,500
Step:3
Profit or Loss = Total sales price - Total cost
= 382,500 - 390,000
= - 7,500 ( Negative indicates Loss )
Loss = $7500
Result:
The income (loss) under absorption costing is $7,500, which is mentioned in option C for the Favaz began business.
