Santana Rey expected sales of her line of computer workstation furniture to equal 300 workstations (at a sales price of $3,600) for 2012. The workstations' manufacturing costs include the following.
|
|
|
|
|
|
| Direct materials |
|
$ |
740 |
per unit |
|
| Direct labor |
|
$ |
340 |
per unit |
|
| Variable overhead |
|
$ |
80 |
per unit |
|
| Fixed overhead |
|
$ |
19,200 |
per year |
|
|
| The selling expenses related to these workstations follow. |
|
|
|
|
|
|
| Variable selling expenses |
|
$ |
45 |
per unit |
|
| Fixed selling expenses |
|
$ |
3,700 |
per year |
|
|
Santana is considering how many workstations to produce in 2012. She is confident that she will be able to sell any workstations in her 2012 ending inventory during 2013. However, Santana does not want to overproduce as she does not have sufficient storage space for many more workstations.
| Required: |
| 1. |
Compute Business Solutions' absorption costing income assuming.
|
| 2. |
Compute Business Solutions%u2019 variable costing income assuming.
|