Jean Peck's Furniture manufactures tables for hospitality sector. It takes only bulk orders and each table is sold for $500 after negotiations. In the month of January, it manufactures 3,000 tables and sells 2,600 tables. Actual fixed costs are the same as the amount of fixed costs budgeted for the month.
The following information is provided for the month of January:
At the end of the month Jean Peck's Furniture has an ending inventory of finished goods of 400 units. The company also incurs a sales commission of $13 per unit.
What is the operating income when using absorption costing? (Round any intermediary calculations to the nearest cent and your final answer to the nearest dollar.)
Definitions:
Purchasing Power
Purchasing power denotes the value of currency expressed in the quantity of goods or services that one unit of money can buy, often related to the effects of inflation or deflation.
Inflation
The tempo at which the prevalent prices for goods and services swell, erasing buying effectiveness.
Annual Interest Rate
The percentage of principal charged by the lender for the use of its money, calculated on an annual basis.
Overall Level of Prices
The overall level of prices refers to the average price of goods and services across the economy at a given time.
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