Response:
Net operating profit equals 102,000
Explanation:
Based on the following data:
Selling price per unit is $ 71
Manufacturing costs:
Direct materials cost $ 12
Direct labor cost $ 6
Variable manufacturing overhead is $ 3
Annual fixed manufacturing overhead totals $ 264,000
Selling and administrative expenses:
Variable selling/admin expenses per sold unit are $ 4
Annual fixed selling/admin expenses total $ 74,000
Year 1
Starting inventory numbers 0
Units produced throughout the year are 11,000
Sold units during the year total 8,000
Ending inventory numbers 3,000
Year 2
Beginning inventory equals 3,000
Units manufactured for the year total 12,000
Units sold throughout the year are 14,000
Ending inventory is 1,000
Unitary cost is calculated as: (12 + 6 + 3) + (264,000/11,000)= $45
Income statement details:
Sales total = (8,000*$71)= 568,000
COGS total = (8,000*45)= 360,000 (-)
Gross profit = 208,000
Variable selling/admin costs = (4*8000)= 32,000 (-)
Fixed selling/admin costs = 74,000 (-)
Net operating profit rounds to 102,000
