Donovan Company incurred the following costs while producing 500 units: direct materials, $10 per unit; direct labor, $25 per unit; variable manufacturing overhead, $15 per unit; total fixed manufacturing overhead costs, $10,000; variable selling and administrative costs, $5 per unit; total fixed selling and administrative costs, $7,500. There are no beginning inventories. What is the operating income using absorption costing if 500 units are sold for $100 each? a. $500 b. $2,500 c. $2,750 d. $5,000

Financial And Managerial Accounting
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Donovan Company incurred the following costs while producing 500 units: direct materials, $10 per unit; direct labor, $25 per unit; variable manufacturing overhead, $15 per unit; total fixed manufacturing overhead costs, $10,000; variable selling and administrative costs, $5 per unit; total fixed selling and administrative costs, $7,500. There are no beginning inventories.

What is the operating income using absorption costing if 500 units are sold for $100 each?

a. $500

b. $2,500

c. $2,750

d. $5,000

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