Question

The beginning inventory is 52,800 units. All of the units that were manufactured during the period and 52,800 units of the beginning inventory were sold. The beginning inventory fixed manufacturing costs are $14.70 per unit, and variable manufacturing costs are $30 per unit. a. Determine whether variable costing income from operations is less than or greater than absorption costing income from operations. b. Determine the difference in variable costing and absorption costing income from operations. $

Answer 1

Answer:

a. As per the situation sales exceed production absorption costing income from operations is lesser than variable costing income from operations.

b. $776,160

Explanation:

a. As per the situation sales exceed production absorption costing income from operations is lesser than variable costing income from operations

b. Given that

Beginning inventory = 52,800

Fixed manufacturing costs = $14.70 per unit

Total Beginning inventory = Beginning inventory × Fixed manufacturing costs

= 52,800 × $14.70 per unit

= $776,160