Reference no: EM131831439

Problem - Santana Rey expected sales of her line of computer workstation furniture to equal 300 workstations (at a sales price of $3,600) for 2012. The workstations' manufacturing costs include the following.

Direct materials $ 800 per unit 

Direct labor $ 330 per unit 

Variable overhead $ 90 per unit 

Fixed overhead $ 24,000 per year 

The selling expenses related to these workstations follow.

Variable selling expenses $ 35 per unit 

Fixed selling expenses $ 3,600 per year 

Santana is considering how many workstations to produce in 2012. She is confident that she will be able to sell any workstations in her 2012 ending inventory during 2013. However, Santana does not want to overproduce as she does not have sufficient storage space for many more workstations.

Required:

1. Compute Business Solutions' absorption costing income assuming.

a. 300 Workstations $

b. 320 Workstations $

2. Compute Business Solutions' variable costing income assuming.

a. 300 Workstations $

b. 320 Workstations $