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In 2019, Troy Camejo Inc. sold 50,000 units at a selling price of $44 per unit. The company manufactured 80,000 units. Variable manufacturing costs were $19 per unit manufactured. Fixed manufacturing costs amounted to $340,000. Variable marketing costs were $15 per unit sold, and the budgeted and actual fixed marketing costs were $39,000. Other fixed operating expenses amounted to $15,000. There was no beginning inventory.Do not enter dollar signs or commas in the input boxes.Round all answers to the nearest whole number.a) Calculate the company's 2019 operating income using absorption costing.Revenues $AnswerCost of Goods Sold: Beginning Inventory $AnswerCost of Goods Manufactured $AnswerLess: Ending Inventory $AnswerCost of Goods Sold $AnswerGross Margin $AnswerOperating Expenses: Marketing Costs $AnswerOther Fixed Operating Expenses $Answer$AnswerIncome from Operations $Answer

Question

In 2019, Troy Camejo Inc. sold 50,000 units at a selling price of 44perunit.Thecompanymanufactured80,000units.Variablemanufacturingcostswere44 per unit. The company manufactured 80,000 units. Variable manufacturing costs were 19 per unit manufactured. Fixed manufacturing costs amounted to 340,000.Variablemarketingcostswere340,000. Variable marketing costs were 15 per unit sold, and the budgeted and actual fixed marketing costs were 39,000.Otherfixedoperatingexpensesamountedto39,000. Other fixed operating expenses amounted to 15,000. There was no beginning inventory.Do not enter dollar signs or commas in the input boxes.Round all answers to the nearest whole number.a) Calculate the company's 2019 operating income using absorption costing.Revenues AnswerCostofGoodsSold:BeginningInventoryAnswerCost of Goods Sold: Beginning Inventory AnswerCost of Goods Manufactured AnswerLess:EndingInventoryAnswerLess: Ending Inventory AnswerCost of Goods Sold AnswerGrossMarginAnswerGross Margin AnswerOperating Expenses: Marketing Costs AnswerOtherFixedOperatingExpensesAnswerOther Fixed Operating Expenses AnswerAnswerIncomefromOperationsAnswerIncome from Operations Answer

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Solution

Sure, let's calculate the company's 2019 operating income using absorption costing.

a) Calculate the company's 2019 operating income using absorption costing.

  1. Revenues: The company sold 50,000 units at a selling price of 44perunit.So,thetotalrevenueis50,000units∗44 per unit. So, the total revenue is 50,000 units * 44/unit = $2,200,000.

  2. Cost of Goods Sold:

    • Beginning Inventory: There was no beginning inventory, so this is $0.
    • Cost of Goods Manufactured: The company manufactured 80,000 units at a variable manufacturing cost of 19perunit.So,thetotalvariablemanufacturingcostis80,000units∗19 per unit. So, the total variable manufacturing cost is 80,000 units * 19/unit = 1,520,000.Addingthefixedmanufacturingcostsof1,520,000. Adding the fixed manufacturing costs of 340,000, the total cost of goods manufactured is 1,520,000+1,520,000 + 340,000 = $1,860,000.
    • Less: Ending Inventory: The company manufactured 80,000 units but sold only 50,000 units, so there are 30,000 units left in the ending inventory. The cost of these units is 30,000 units * 19/unit=19/unit = 570,000.
    • Cost of Goods Sold: The total cost of goods sold is the cost of goods manufactured minus the ending inventory, which is 1,860,000−1,860,000 - 570,000 = $1,290,000.

  3. Gross Margin: The gross margin is the total revenue minus the cost of goods sold, which is 2,200,000−2,200,000 - 1,290,000 = $910,000.

  4. Operating Expenses:

    • Marketing Costs: The variable marketing costs were 15perunitsold,sothetotalvariablemarketingcostis50,000units∗15 per unit sold, so the total variable marketing cost is 50,000 units * 15/unit = 750,000.Addingthefixedmarketingcostsof750,000. Adding the fixed marketing costs of 39,000, the total marketing costs are 750,000+750,000 + 39,000 = $789,000.
    • Other Fixed Operating Expenses: The other fixed operating expenses amounted to $15,000.

  5. Total Operating Expenses: The total operating expenses are the sum of the marketing costs and other fixed operating expenses, which is 789,000+789,000 + 15,000 = $804,000.

  6. Income from Operations: The income from operations is the gross margin minus the total operating expenses, which is 910,000−910,000 - 804,000 = $106,000.

So, the company's 2019 operating income using absorption costing is $106,000.

This problem has been solved

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