Analyzing Income under Absorption and Variable Costing Variable manufacturing costs are $110 per unit, and foxed manufacturing costs are $112,000. Sales are estimated to be 4,200 units. If an amount is zero, enter "0". Do not round interim calculations. Round final answer to nearest whole dollar. a. How much would absorption costing income from operations differ between a plan to produce 4,200 units and a plan to produce 5.600 units? b. How much would variable costing income from operations differ between the tvwo production plans?

Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter7: Variable Costing For Management analysis
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**Analyzing Income under Absorption and Variable Costing**

Variable manufacturing costs are $110 per unit, and fixed manufacturing costs are $112,000. Sales are estimated to be 4,200 units.

If an amount is zero, enter “0”. Do not round interim calculations. Round final answer to nearest whole dollar.

a. How much would absorption costing income from operations differ between a plan to produce 4,200 units and a plan to produce 5,600 units?
   $ [Input box]

b. How much would variable costing income from operations differ between the two production plans?
   $ [Input box]
Transcribed Image Text:**Analyzing Income under Absorption and Variable Costing** Variable manufacturing costs are $110 per unit, and fixed manufacturing costs are $112,000. Sales are estimated to be 4,200 units. If an amount is zero, enter “0”. Do not round interim calculations. Round final answer to nearest whole dollar. a. How much would absorption costing income from operations differ between a plan to produce 4,200 units and a plan to produce 5,600 units? $ [Input box] b. How much would variable costing income from operations differ between the two production plans? $ [Input box]
Expert Solution
Step 1

Under absorption costing, both variable and fixed costs are used for calculating Income.

Under variable Costing, only variable costs are used for calculating income.

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