Neon Company manufactures widgets. The following data is related to sales and production of the widgets for last year

Selling price per unit $130.00
Variable manufacturing costs per unit $62.00
Variable selling and administrative expenses per unit $5.00
Fixed manufacturing overhead (in total) $30,000
Fixed selling and administrative expenses (in total) $8,000
Units produced during the year 1,500
Units sold during year 1,100

Using absorption costing, what is operating income for last year?
A) $39,300
B) $66,300
C) $219,700
D) $143,000

A
Explanation: A)
Fixed MOH $30,000 divided by units produced 1,500 = $20 Fixed MOH
Add Variable manufacturing cost 62
= Total Manufacturing cost $82
× 1,100 sales
= $90,200 Cost of goods sold

So: Sales $130 × 1,100 = $143,000
Less Cost of Goods Sold 90,200
Equals Gross Profit $52,800
Less Variable selling 5,500
Less fixed selling 8,000
Operating Income $39,300