Question

Sims Company, a manufacturer of tablet computers, began operations on January 1, 2017. Its cost and sales information for this year follows.

Manufacturing costs
Direct materials	$	30	per unit
Direct labor	$	50	per unit
Overhead costs for the year
Variable overhead	$	2,000,000
Fixed overhead	$	8,000,000
Selling and administrative costs for the year
Variable	$	775,000
Fixed	$	4,250,000
Production and sales for the year
Units produced		100,000	units
Units sold		70,000	units
Sales price per unit	$	350	per unit

1. Prepare an income statement for the year using variable costing.
2. Prepare an income statement for the year using absorption costing.
3. Under what circumstance(s) is reported income identical under both absorption costing and variable costing?

Answer 1

3) when the units produced and sold is the same , the net operating income reported under the both absorption and variable costing incomes are the identical  

or

when there is no closing inventory ,the net income reported under both methods are the identical .