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ABC produces sporting equipment. Below are condensed results for the first two years of operation. ABC has a December 31 year-en Year 1: 25,000 18,000 Year 2, the results were exactly reversed: 18,000 25,000 Each year the following unit prices were the same: $100 $40 $8 $540,000 $200,000 structions Units Produced Units Sold Units Produced Units Sold Selling Price Variable Manufacturing Costs Variable Selling Costs Fixed Manufacturing Costs Fixed Administrative Expenses A. Calculate net income under variable costing for each year. B. Calculate net income under absorption costing for each year. C. Reconcile the differences each year in income from operations under the two costing approaches.

ABC produces sporting equipment. Below are condensed results for the first two years of operation. ABC has a December 31 year-en Year 1: 25,000 18,000 Year 2, the results were exactly reversed: 18,000 25,000 Each year the following unit prices were the same: $100 $40 $8 $540,000 $200,000 structions Units Produced Units Sold Units Produced Units Sold Selling Price Variable Manufacturing Costs Variable Selling Costs Fixed Manufacturing Costs Fixed Administrative Expenses A. Calculate net income under variable costing for each year. B. Calculate net income under absorption costing for each year. C. Reconcile the differences each year in income from operations under the two costing approaches.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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ABC produces sporting equipment. Below are condensed results for the first two years of operation. ABC has a December 31 year-end. Year 1: 25,000 18,000 Year 2, the results were exactly reversed: 18,000 25,000 Each year the following unit prices were the same: $100 $40 $8 $540,000 $200,000 Instructions Units Produced Units Sold Units Produced Units Sold Selling Price Variable Manufacturing Costs Variable Selling Costs Fixed Manufacturing Costs Fixed Administrative Expenses A. Calculate net income under variable costing for each year. B. Calculate net income under absorption costing for each year. C. Reconcile the differences each year in income from operations under the two costing approaches.
Transcribed Image Text:ABC produces sporting equipment. Below are condensed results for the first two years of operation. ABC has a December 31 year-end. Year 1: 25,000 18,000 Year 2, the results were exactly reversed: 18,000 25,000 Each year the following unit prices were the same: $100 $40 $8 $540,000 $200,000 Instructions Units Produced Units Sold Units Produced Units Sold Selling Price Variable Manufacturing Costs Variable Selling Costs Fixed Manufacturing Costs Fixed Administrative Expenses A. Calculate net income under variable costing for each year. B. Calculate net income under absorption costing for each year. C. Reconcile the differences each year in income from operations under the two costing approaches.
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