Required information
[The following information applies to the questionsdisplayed below.]
Oak Mart, a producer of solid oak tables, reports the followingdata from its second year of business.
| | | |
| Sales price per unit | $ | 320 | per unit |
| Units produced this year | | 115,000 | units |
| Units sold this year | | 118,250 | units |
| Units in beginning-year inventory | | 3,250 | units |
| Beginning inventory costs | | | |
| Variable (3,250 units × $135) | $ | 438,750 | |
| Fixed (3,250 units × $80) | | 260,000 | |
| Total | $ | 698,750 | |
| Manufacturing costs this year | | | |
| Direct materials | $ | 42 | per unit |
| Direct labor | $ | 64 | per unit |
| Overhead costs this year | | | |
| Variable overhead | $ | 3,400,000 | |
| Fixed overhead | $ | 7,400,000 | |
| Selling and administrative costs this year | | | |
| Variable | $ | 1,500,000 | |
| Fixed | | 4,000,000 | |
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2. Prepare the current-year income statementfor the company using absorption costing.
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| | OAK MART COMPANY | | Absorption Costing IncomeStatement | | | | | | | Beginning inventory | | | | Manufacturing costs this year | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net income (loss) | | | | | | | | | | | | | | Fixed costs addedto(subtracted from) inventory | | |
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