Question

1. Under absorption costing, how much fixed manufacturing overhead cost is included in the company's inventory at the end of last year? 2. Prepare an income statement for last year using variable costing. What is the amount of the difference in net operating income between the two costing methods?

Answer 1

Answer:

1.

$5,200 a fixed manufacturing overhead cost is included in the company's inventory at the end of last year.

2.

Income Statement is Prepared in an MS Excel File Attached With this answer Please find it.

Step-by-step explanation:

1.

Fixed Manufacturing Overhead = Total Fixed manufacturing Overhead x Units in ending inventory  / Units produced

Fixed Manufacturing Overhead = 65,000 x 20 / 250 = $5,200

2.

File Attached.

There is a Difference of $5,200 in net operating income between the two costing methods. The amount of fixed asset assigned to closing inventory.

Download xlsx