In: Accounting
You are given the following
information:
Units in beginning inventory |
0 |
Units produced |
40,000 |
Units sold |
37,000 |
Selling price per unit |
$120.00 |
Variable costs per unit: |
|
Direct materials |
$15.00 |
Direct labor |
$30.00 |
Variable manufacturing overhead |
$5.00 |
Variable selling and administrative |
$3.00 |
Fixed expenses per year: |
|
Fixed manufacturing overhead |
$600,000 |
Fixed selling and administrative |
$800,000 |
Based on this information, calculate the company's
operating income under both absorption costing and variable costing
approaches. If there is a difference between the two income
numbers, show the reconciliation between the two.