Question

Jeter Corporation had net income of $232,000 based on variable costing. Beginning and ending inventories were 8,000 units and 14,000 units, respectively. Assume the fixed overhead per unit was $6 for both the beginning and ending inventory. What is net income under absorption costing

Answer 1

Answer:

The question is missing the below details

$316,000

$268,000

$304,000

$364,000

$232,000

The net income under absorption costing is $268,000.00

Explanation:

Under absorption costing the entire fixed overhead is absorbed in one period but variable costing only charges the fixed costs that relate to items sold as the period expense.

It must be noted that in calculating net income under absorption costing, that the net income under variable costing is adjusted for fixed overhead relating closing and opening inventories

The net income under absorption costing is :

Net income under variable costing                                                 $232000 additional fixed overhead on closing inventory(14000*6               $84000

less fixed overhead in opening inventory  (8000*6)                      ( $48000)  

Net income                                                                                          $268000