Homework Answers
1)cost formula
fixed cost + variable cost*units produced
=[300000+100000+200000]+[6+4+2]*units produced
=600000+12x
2)variable cost treats fixed overhead as period cost. they are not
differed to next period through inventory
whereas absorption costing considers fixed overhead as product cost. they are carried forward to next period through inventory.
here 10000are produced and 8000 are sold therefore cost of fixed overhead of 2000 units will be differed to next period in absorption costing whereas variable costing will expense whole fixed overhead in current year only.
absorption costing will result in lesser cost and higher profit.
3)difference between unit cost
under variable and absorption costing will be fixed overhead per unit produced.
=300000/10000
=30$
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