Hi, could you, please show calculations and explain the answer for this quesiton:
Classix Products reported $28 000 in net profit for the year using variable costing. The company had no units in beginning inventory, planned and actual production was 30 000 units, and sales were 25 000 units during the year. Variable manufacturing costs were $15 per unit and total budgeted fixed manufacturing overhead was $150 000. There was no underapplied or overapplied overhead reported during the year.
Determine the net profit under absorption costing.
Selected Answer: $53 000
I think the answer is from 28000+25000=53000, where the $25000=5000units * $5 (the fixed $ per unit- from 150000/30000)
So for the 5000 units that we are multiplying by $5 - is the amount of Fixed overhead for the unsold produced units during the period.
Then we are not getting the net profit under absorption cost, but the actual costing?
Could you help please?