Answer:
<em>VARIABLE COSTING</em>
sales revenue 3,910,000 (23,000 X 170)
variable cost <u> (1,058,000) </u>(23,000 X 46)
contribution margin <u> 2,852,000 </u>
fixed overhead 858,000
fixed S&A <u> 895,000 </u>
NET INCOME 1,099,000
<em>ABSORPTION COSTING</em>
sales revenue 3,910,000
COGS <u> (1,564,000) </u>(23,000 X 68)
Gross profit 2,346,000
S&A
variable 92,000
fixed <u> 895,000 </u>
net income 1,359,000
<em>The difference arise as the fixed manufacturing cost are posted entirely in the variable cost while only a portion for the absorption cost:</em>
26 dollar per unit time 10,000 units in inventory with capitalized fixed cost
260,000
<em></em>
difference in operating income:
1,359,000 - 1,099,000 = 260,000
Explanation:
variable costing will add up the variable cost per unit and multiply by the 23000 unit sold:
Selling & Adminsitrative 4
materials 23
labor 15
variable manufacturing 4
the fixed cost will be posted entirely.
absorption will distribute the manufacturing fixed cost among the produced units:
858,000 / 33,000 = 26 dollar per unit
total cost per unit:
26 fixed + 23 materials + labor 15 + variable 4 = 68
<em></em>
<em>The difference arise as the fixed manufacturing cost are posted entirely in the variable cost while only a portion for the absorption cost:</em>
26 dollar per unit time 10,000 units in inventory with capitalized fixed cost
260,000
<em></em>
difference in operating income:
1,359,000 - 1,099,000 = 260,000
<em></em>
<em>NOTE</em> attached missing information