Leheny Corporation Manufactures and Sells One Product

Multiple Choice

Leheny Corporation manufactures and sells one product. The following information pertains to the company's first year of operations: The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 55,000 units and sold 50,000 units. The company's only product is sold for $238 per unit.
Assume that the company uses an absorption costing system that assigns $21 of direct labor cost and $58 of fixed manufacturing overhead to each unit that is produced. The net operating income under this costing system is:

A) $580,000
B) $1,400,000
C) $1,005,000
D) $1,110,000