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Absorption Costing Chandler Company sells its product for $107 per unit. Variable manufacturing costs per unit are $48, and fixed manufacturing costs at the normal operating level of 12,000 units are $240,000. Variable selling expenses are $19 per unit sold. Fixed administrative expenses total $104,000. Chandler had no beginning inventory in 2016. During 2016, the company produced12,000 units and sold 9,000. Would net income for Chandler Company in 2016 be higher if calculated using variable costing or using absorption costing Calculate reported income using each method. Do not use negative signs with any answers. Absorption Costing Income Statement Sales 963,000 Cost of Goods Sold: Beginning inventory Variable Costs 576.000 Fixed Costs 240.000 Less: Ending inventory Cost of Goods Sold Gross profi. Contribution margin Administrative expense 104.000 Net income Variable Costing Income Statement Sales 963.000 Cost of Goods Sold: Beginning inventory Variable Costs Variable cost of goods sold Fixed costs: Administrative Expense Total Fixed Cost

Absorption Costing Chandler Company sells its product for $107 per unit. Variable manufacturing costs per unit are $48, and fixed manufacturing costs at the normal operating level of 12,000 units are $240,000. Variable selling expenses are $19 per unit sold. Fixed administrative expenses total $104,000. Chandler had no beginning inventory in 2016. During 2016, the company produced12,000 units and sold 9,000. Would net income for Chandler Company in 2016 be higher if calculated using variable costing or using absorption costing Calculate reported income using each method. Do not use negative signs with any answers. Absorption Costing Income Statement Sales 963,000 Cost of Goods Sold: Beginning inventory Variable Costs 576.000 Fixed Costs 240.000 Less: Ending inventory Cost of Goods Sold Gross profi. Contribution margin Administrative expense 104.000 Net income Variable Costing Income Statement Sales 963.000 Cost of Goods Sold: Beginning inventory Variable Costs Variable cost of goods sold Fixed costs: Administrative Expense Total Fixed Cost

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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Would net income for Chandler Compnay in 2016 be higher if calculated using variable costing or using absorption costing?

Variable and Absorption Costing Chandler Company sells its product for $107 per unit. Variable manufacturing costs per unit are $48, and fixed manufacturing costs at the normal operating level of 12,000 units are $240,000. Variable selling expenses are $19 per unit sold. Fixed administrative expenses total $104,000. Chandler had no beginning inventory in 2016. During 2016, the company produced 12,000 units and sold 9,000. Would net income for Chandler Company in 2016 be higher if calculated using variable costing or using absorption costing? Calculate reported income using each method. Do not use negative signs with any answers. Absorption Costing Income Statement Sales 24 963,000 Cost of Goods Sold: Beginning Inventory 0. Variable Costs 576,000 Fixed Costs 240,000 Less: Ending Inventory 0. Cost of Goods Sold Gross profit 0. Contribution margin 0. Administrative expense 104,000 Net Income Variable Costing Income Statement Sales 24 963,000 Cost of Goods Sold: Beginning Inventory Variable Costs Variable cost of goods sold Fixed costs: Administrative Expense 0. 0. Total Fixed Cost Net Income %24
Transcribed Image Text:Variable and Absorption Costing Chandler Company sells its product for $107 per unit. Variable manufacturing costs per unit are $48, and fixed manufacturing costs at the normal operating level of 12,000 units are $240,000. Variable selling expenses are $19 per unit sold. Fixed administrative expenses total $104,000. Chandler had no beginning inventory in 2016. During 2016, the company produced 12,000 units and sold 9,000. Would net income for Chandler Company in 2016 be higher if calculated using variable costing or using absorption costing? Calculate reported income using each method. Do not use negative signs with any answers. Absorption Costing Income Statement Sales 24 963,000 Cost of Goods Sold: Beginning Inventory 0. Variable Costs 576,000 Fixed Costs 240,000 Less: Ending Inventory 0. Cost of Goods Sold Gross profit 0. Contribution margin 0. Administrative expense 104,000 Net Income Variable Costing Income Statement Sales 24 963,000 Cost of Goods Sold: Beginning Inventory Variable Costs Variable cost of goods sold Fixed costs: Administrative Expense 0. 0. Total Fixed Cost Net Income %24
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