Answer:
a. The variable costing operating income is less than absorption costing operating income.
b. The difference in variable costing and absorption costing operating income is:
= $739,200.
Explanation:
a) Data and Calculations:
Fixed manufacturing costs per unit = $44
Variable manufacturing costs per unit = $100
Production units = 67,200
Sales units = 50,400
Ending inventory = 16,800
Income Statements Variable Absorption
Costing Costing
Costs of goods sold: $5,040,000 $7,257,600
Fixed expenses 2,956,800
Total costs $7,996,800 $7,257,600 $739,200
b) The difference in variable costing and absorption costing operating income is because of the absorbed fixed costs in ending inventory, which is now carried forward to the next accounting period.
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