C. absorption costing operating income exceeds variable costing operating income
ID: 2577026 • Letter: C
Question
C. absorption costing operating income exceeds variable costing operating income Garfield Company has the following information for the current year: Beginning fixed manufacturing overhead in inventory $250,000 Fixed manufacturing overhead in production 850,000 Ending fixed manufacturing overhead in inventory 70,000 Beginning variable manufacturing overhead in inventory $40,000 Variable manufacturing overhead in production 100,000 nding variable manufacturing overhead in inventory 30,000 Vhat is the difference between operating incomes under absorption costing and variable costing? 80,000Explanation / Answer
Calculation of the difference between operating incomes under absorption costing and variable costing
The difference between operating incomes under absorption costing and variable costing
= Beginning fixed manufacturing overhead in inventory - Ending fixed manufacturing overhead in inventory
= $250,000 - $70,000
= $180,000
Therefore, the difference between operating incomes under absorption costing and variable costing is $180,000.
Explanation:
The difference between operating incomes under absorption costing and variable costing arises due to Fixed manufacturing overhead costs deferred in (released from) inventory under absorption costing