Variable Costing—Production Exceeds Sales
Fixed manufacturing costs are $44 per unit, and variable manufacturing costs are $100 per unit. Production was 67,200 units, while sales were 50,400 units.
a. Determine whether variable costing income from operations is less than or greater than absorption costingincome from operations.
Variable costing income from operations is greater than absorption costing.
Variable costing income from operations is less than absorption costing.
b. Determine the difference in variable costing
and absorption costing income from operations.
$
Requirement(a)- Whether variable costing income from operations is less than or greater than absorption costing income from operations.
Variable costing income from operations is less than absorption costing.
Requirement (b)- The difference in variable costing and absorption costing income from operations
The difference in variable costing and absorption costing income from operations = [The Production Quantity – Sales Quantity] x Fixed manufacturing cost per unit
= [67,200 Units – 50,400 Units] x $44 per unit
= 16,800 Units x $44 per unit
= $739,200
“The difference in variable costing and absorption costing income from operations = $739,200”
Variable Costing—Production Exceeds Sales Fixed manufacturing costs are $44 per unit, and variable manufacturing costs are...
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