Scavenger Company, a manufacturer of recycling bins, began operations on January 1 of the current year. During this time, the company produced 60,000 units and sold 55,000 units at a sales price of $15 per unit. 

Cost information for this year is shown in the following table:
  Given the Scavenger Company data, what is net income using absorption costing?

Transcribed Image Text:

Production costs Direct materials Direct labor Variable overhead Fixed overhead Nonproduction costs Variable selling and administrative Fixed selling and administrative $2.50 per unit $3.00 per unit $45.000 in total $240,000 in total $10.000 in total $50,000 in total Production costs Direct materials Direct labor Variable overhead Fixed overhead Nonproduction costs Variable selling and administrative Fixed selling and administrative $2.50 per unit $3.00 per unit $45.000 in total $240,000 in total $10.000 in total $50,000 in total

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To calculate net income using absorption costing we need to consider both variable and fixed manufacturing costs Absorption costing allocates fixed ma... View the full answer