Answer:
$52,500
Explanation:
Plan - 1 Plan - 2
Units produced 10,000 15,000
Variable Manufacturing cost $126 $126
Fixed manufacturing cost $15.75 $10.50
($157,500 ÷ Units produced)
Unit cost $141.75 $136.50
Working note
Fixed manufacturing cost for Plan A = $157,500 ÷ 10,000
= $15,75
Fixed manufacturing cost for Plan B = $157,500 ÷ 15,000
= $10.50
Unit cost for Plan A = $126 + $15.75
= $141.75
Unit cost for Plan B = $126 + $10.50
= $136.50
Income under two plans different for the amount as below Number of units in ending inventory in Plan -2 = 5,000 units
(i.e. 15000 units produced - 10,000 units sold)
Fixed manufacturing of per unit = $10.5
Difference in Income in two plans under Absorption costing = 10,000 × $10.5
= $52,500
Variable costing
Therefore, there will be no difference in income of Two plans under Variable costing.
