Analyzing Income under Absorption and Variable Costing Variable manufacturing co

Question

Analyzing Income under Absorption and Variable Costing Variable manufacturing costs are $104 per unit, and fixed manufacturing costs are $68,400. Sales are estimated to be 3,500 units. If an amount is zero, enter "0". Do not round interim calculations. Round final answer to nearest whole dollar. a. How much would absorption costing income from operations differ between a plan to produce 3,500 units and a plan to produce 5,700 units? $ b. How much would variable costing income from operations differ between the two production plans? $

Explanation / Answer

A)Fixed manufacturing overhead charged :Uner plan A= 68400

           Under Plan B= 68400 * 3500/5700 = 42000

Income under Plan B will be higher by 68400 -42000 = 26400 than plan A

b) iNcome under variable costing will differ by =   [5700-3500] *104 = 228800

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects