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Analyzing Income under Absorption and Variable Costing Variable manufacturing costs are $126 per unit, and fixed manufacturing costs are $157,500. Sales are estimated to be 10,000 units. If an amount is zero, enter "0". a. How much would absorption costing operating income differ between a plan to produce 10,000 units and a plan to produce 15,000 units? 78,750 X b. How much would variable costing operating income differ between the two production plans? 0 Feedback ▼Check My Work a. Remember that under variable costing, regardless of whether units or units are manufactured, no fixed manufacturing costs are allocated to the units manufactured. Instead, all fixed manufacturing costs are treated as a period expense. Therefore the change in units times the per unit fixed costs for the greater production level is the difference in income between the two costing methods. b. Remember that since all fixed manufacturing costs are treated as period expenses under variable costing, there are no differences in income between the two plans.

Analyzing Income under Absorption and Variable Costing Variable manufacturing costs are $126 per unit, and fixed manufacturing costs are $157,500. Sales are estimated to be 10,000 units. If an amount is zero, enter "0". a. How much would absorption costing operating income differ between a plan to produce 10,000 units and a plan to produce 15,000 units? 78,750 X b. How much would variable costing operating income differ between the two production plans? 0 Feedback ▼Check My Work a. Remember that under variable costing, regardless of whether units or units are manufactured, no fixed manufacturing costs are allocated to the units manufactured. Instead, all fixed manufacturing costs are treated as a period expense. Therefore the change in units times the per unit fixed costs for the greater production level is the difference in income between the two costing methods. b. Remember that since all fixed manufacturing costs are treated as period expenses under variable costing, there are no differences in income between the two plans.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Analyzing Income under Absorption and Variable Costing Variable manufacturing costs are $126 per unit, and fixed manufacturing costs are $157,500. Sales are estimated to be 10,000 units. If an amount is zero, enter "0". a. How much would absorption costing operating income differ between a plan to produce 10,000 units and a plan to produce 15,000 units? 78,750 X b. How much would variable costing operating income differ between the two production plans? 0 Feedback ▼Check My Work a. Remember that under variable costing, regardless of whether units or units are manufactured, no fixed manufacturing costs are allocated to the units manufactured. Instead, all fixed manufacturing costs are treated as a period expense. Therefore the change in units times the per unit fixed costs for the greater production level is the difference in income between the two costing methods. b. Remember that since all fixed manufacturing costs are treated as period expenses under variable costing, there are no differences in income between the two plans.
Transcribed Image Text:Analyzing Income under Absorption and Variable Costing Variable manufacturing costs are $126 per unit, and fixed manufacturing costs are $157,500. Sales are estimated to be 10,000 units. If an amount is zero, enter "0". a. How much would absorption costing operating income differ between a plan to produce 10,000 units and a plan to produce 15,000 units? 78,750 X b. How much would variable costing operating income differ between the two production plans? 0 Feedback ▼Check My Work a. Remember that under variable costing, regardless of whether units or units are manufactured, no fixed manufacturing costs are allocated to the units manufactured. Instead, all fixed manufacturing costs are treated as a period expense. Therefore the change in units times the per unit fixed costs for the greater production level is the difference in income between the two costing methods. b. Remember that since all fixed manufacturing costs are treated as period expenses under variable costing, there are no differences in income between the two plans.
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