Fresco Bottling Works Manufactures Glass Bottles

Essay

Fresco Bottling Works manufactures glass bottles.January began with 10,000 units carried at $71,500.An additional 55,000 units were produced that month.February had production of 50,000 units.Fixed manufacturing costs totalled $192,500 in January and $180,000 in February.Sales for both months totalled 45,000 units with variable manufacturing costs of $4 per unit.Selling and administrative costs were $0.35 per unit variable and $70,000 fixed.The selling price was $11 per unit.Inventory moves on a first-in, first-out basis.Required:
Compute the operating income for both months using absorption costing.