In: Accounting
Analyzing Income under Absorption and Variable Costing
Variable manufacturing costs are $90 per unit, and fixed manufacturing costs are $95,400. Sales are estimated to be 8,200 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 8,200 units and a
plan to produce 10,600 units?
$fill in the blank 1
b. How much would variable costing income from
operations differ between the two production plans?
$fill in the blank 2
a) $21,566 |
Working:-
Units Produced (A) |
Total fixed cost (B) |
Fixed cost per unit C = B / A |
Units Produced (D) |
Total fixed cost (E) |
Fixed cost per unit F = E / D |
Units Sold (G) |
Difference in Income G X ( C - F) |
||
8200 |
$95,400 |
$11.63 |
10,600 |
$95,400 |
$9 |
8200 |
$21,566 |
|
b) 0 |
Working:-
Units Produced (A) |
Variable cost per unit (B) |
Units Produced (C) |
Variable cost per unit (D) |
Units Sold (E) |
Difference in Income E X ( B - D) |
||
8200 |
$90 |
10,600 |
$90 |
8,200 |
0 |
|