Ming Company had net income of $772,200 based on variable costing. Beginning and ending inventories were 7,800 units and 5,200 u

Question

3 years ago

8

Ming Company had net income of $772,200 based on variable costing. Beginning and ending inventories were 7,800 units and 5,200 u

nits, respectively. Assume the fixed overhead per unit was $3.00 for both the beginning and ending inventory. What is net income under absorption costing?

Business

1 answer:

Otrada [13] · Answer 1 · 2022-01-13T21:02:28+03:00

Answer:

$764,400

Explanation:

Given that,

Net income under variable costing = $772,200

Beginning inventories = 7,800 units

Ending inventories = 5,200 units

Fixed overhead per unit = $3

Net income under absorption costing:

= Net income under variable costing - [(Beginning inventories - Ending inventories) × Fixed overhead per unit]

= $772,200 - [(7,800 - 5,200) × $3]

= $772,200 - $7,800

= $764,400