Ella Company
Last Year, Ella Company Produced 10,000 Units and Sold

Multiple Choice

Ella Company
Last year, Ella Company produced 10,000 units and sold 9,000 units at a sales price of $9 per unit. Costs for last year were as follows: $$\begin{array} { |l | r | } \hline\text { Direct materials } & \$ 10,000 \\\hline \text { Direct labour } & 15,000 \\\hline \text { Variable manufacturing overhead } & 5,000 \\\hline \text { Fixed manufacturing overhead } & 20,000 \\\hline \text { Variable selling expense } & 7,200 \\\hline \text { Fixed selling expense } & 5,000 \\\hline \text { Fixed administrative expense } & 12,000 \\\hline\end{array}$$ Fixed manufacturing overhead is applied on the basis of expected production. Last year, the company expected to produce 10,000 units.The company had no beginning inventories.
-Refer to Ella Company. What is the operating income for using the absorption costing method?

A) $11,300
B) $11,800
C) $12,520
D) $36,000