Problem - 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 $ 800 per unit
Direct labor $ 330 per unit
Variable overhead $ 90 per unit
Fixed overhead $ 24,000 per year
The selling expenses related to these workstations follow.
Variable selling expenses $ 35 per unit
Fixed selling expenses $ 3,600 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.
a. 300 Workstations $
b. 320 Workstations $
2. Compute Business Solutions' variable costing income assuming.
a. 300 Workstations $
b. 320 Workstations $