The Johnson Company uses an absorption-costing system based on standard costs. Variable
manufacturing cost consists of direct material cost of $3.00 per unit and other variable manufacturing
costs of $1.40 per unit. The standard production rate is 10 units per machine-hour. Total budgeted and
actual fixed manufacturing overhead costs are $480,000. Fixed manufacturing overhead is allocated at $8
per machine-hour based on fixed manufacturing costs of $480,000 / 60,000 machine-hours, which is the
level Johnson uses as its denominator level. The selling price is $7 per unit. Variable operating (nonmanufacturing) cost, which is driven by units sold, is $1 per unit. Fixed operating (non-manufacturing)
costs are $55,000. Beginning inventory in 2022 is 40,000 units; ending inventory is 45,000 units. Sales in
2022 are 535,000 units. The same standard unit costs persisted throughout 2021 and 2022. For
simplicity, assume that there are no price, spending, or efficiency variances.