Calder Corporation manufactures and sells one product.

Calder Corporation manufactures and sells one product. The following information pertains to the company’s first year of operations:

Variable costs per unit:

Direct Materials……………………….. $92

Fixed costs per year:

Direct Labor…………………………… $720,000

Fixed manufacturing overhead……… $3,264,000

Fixed selling and administrative…….. $1,935,000

The company does not have any variable manufacturing overhead costs or variable selling and administrative costs. During its first year of operations, the company produced 48,000 units and sold 45,000 units. The company’s only product sells for $258 per unit.

Required:

What is the net operating income?

Here’s the SOLUTION

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