Answer:
<u>Year 1</u>
Fixed Overhead in ending inventory = (2,200 * $1.20) = $2,640
<u>Year 2
</u>
Fixed Overhead in ending inventory = (1,700 * $1.20) = $2,040
Fixed overhead in beginning inventory = (2,200 * $1.20) = $2,640
<u>Year 3</u>
Fixed Overhead in ending inventory = (1,800 * $1.20) = $2,160
Fixed overhead in beginning inventory = (1,700 * $1.20) = $2,040
Absorption costing income
Particulars Year 1 Year 2 Year 3
Variable costing income $140,000 $146,400 $143,950
Fixed Overhead in ending inventory $2,640 $2,040 $2,160
Fixed overhead in beginning inventory $0 ($2,640) ($2,040)
Absorption costing income $142,640 $145,800 $144,070
