Oxygen,Inc Assume That the Production Costs and Sales Prices Were the |

Multiple Choice

Oxygen,Inc.reports the following information: $$\begin{array} { | l | r | } \hline \text { Units produced } & 2,500 \text { units } \\\hline \text { Units sold } & 2,000 \text { units } \\\hline \text { Sales price } & \$ 200 \text { per unit } \\\hline \text { Direct materials } & \$ 40 \text { per unit } \\\hline \text { Direct labor } & \$ 25 \text { per unit } \\\hline \text { Variable manufacturing overhead } & \$ 20 \text { per unit } \\\hline \text { Fixed manufacturing overhead } & \$ 90,000 \text { per year } \\\hline \text { Variable selling and administrative costs } & \$ 15 \text { per unit } \\\hline \text { Fixed selling and administrative costs } & \$ 75,000 \text { per year } \\\hline\end{array}$$ Assume that the production costs and sales prices were the same in the previous year.Assume no beginning inventories.
Requirements:

A) Calculate unit product cost using absorption costing and variable costing.
B) Calculate the operating income using absorption costing and variable costing.