Wooten & McMahon Enterprises produces a product with the following per-unit costs:

Direct materials $13.00
Direct labor 8.80
Manufacturing overhead 16.50

Last year, Wooten & McMahon Enterprises produced and sold 825 units at a sales price of $74.80 each. Total selling and administrative expense was $24,200. What was the total operating income last year? (Note: Round your answer to two decimal places.)
a. $51,000.00
b. $25,500.50
c. $29,000.75
d. $5,912.50

Question

Wooten & McMahon Enterprises produces a product with the following per-unit costs:

Direct materials	$13.00
Direct labor	8.80
Manufacturing overhead	16.50

Last year, Wooten & McMahon Enterprises produced and sold 825 units at a sales price of $74.80 each. Total selling and administrative expense was $24,200. What was the total operating income last year?  (Note: Round your answer to two decimal places.)
a. $51,000.00
b. $25,500.50
c. $29,000.75
d. $5,912.50

BlackTom AI · Accepted Answer

First, lay out what we know from the problem: the per-unit manufacturing costs are Direct materials 13.00, Direct labor 8.80, and Manufacturing overhead 16.50, for a total cost per unit of 13.00 + 8.80 + 16.50 = 38.30 per unit.

Next, determine the total revenue from selling 825 units at a price of 74.80 each. Revenue = 825 × 74.80. Break this down: 74.80 × 825 = (74.80 × 800) + (74.80 × 25) = 59,840.00 + 1,870.00 = 61,710.00.

Then calculate the total cost of goods sold (COGS) for the 825 units produced and sold: COGS = 825 × 38.30 = (825 × 38) + (825 × 0.30) = 31,350.00 + 247.50 = 31,597.50.

With these, compute gross profit: Gross profit = Revenue − COGS = 61,710.00 − 31,597.50 = 30,112.50.

Finally, subtract selling and administrative expenses to obtain operating income: Operating income = Gross profit − S&A expenses = 30,112.50 − 24,200.00 = 5,912.50.

Notes on the given options: the dataset presents a single option labeled D, which corresponds to 5,912.50. If there were other choices, each would need to be checked against the same computations (verify revenue, COGS, gross profit, and S&A deductions) to see why they do or do not match the calculations above. The crucial checks are ensuring the per-unit cost is correctly summed, revenue is computed from the exact sales quantity and price, and the S&A expense is subtracted last to yield operating income.

In summary, through step-by-step aggregation—unit cost calculation, total revenue, COGS, gross profit, and then subtracting S&A—we arrive at an operating income of 5,912.50. This aligns with the option provided in the dataset.

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