Bianca Bicycle Company manufactures mountain bikes with a variable cost of $2,800. The cost per unit remained the same in the current year as in the previous year. The bicycles sell for $3,550 each. Budgeted fixed manufacturing overhead for the year is $12,800,000. Planned and actual production for the year were the same. Required: State whether operating income is higher under variable or absorption costing and the amount of the difference in reported operating income under the two methods. Treat each condition as an independent case. Note: Round intermediate calculations to 2 decimal places. 1. 2 3. Production units 23800 14200 13700 Sales Units 28600 14200 10700 Income Higher Under (Method) Amount of Difference
Bianca Bicycle Company manufactures mountain bikes with a variable cost of $2,800. The cost per unit remained the same in the current year as in the previous year. The bicycles sell for $3,550 each. Budgeted fixed manufacturing overhead for the year is $12,800,000. Planned and actual production for the year were the same. Required: State whether operating income is higher under variable or absorption costing and the amount of the difference in reported operating income under the two methods. Treat each condition as an independent case. Note: Round intermediate calculations to 2 decimal places. 1. 2 3. Production units 23800 14200 13700 Sales Units 28600 14200 10700 Income Higher Under (Method) Amount of Difference
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:Bianca Bicycle Company manufactures mountain bikes with a variable cost of $2,800. The cost per unit remained the same in the
current year as in the previous year. The bicycles sell for $3,550 each. Budgeted fixed manufacturing overhead for the year is
$12,800,000. Planned and actual production for the year were the same.
Required:
State whether operating income is higher under variable or absorption costing and the amount of the difference in reported operating
income under the two methods. Treat each condition as an independent case.
Note: Round intermediate calculations to 2 decimal places.
1.
2
3.
Production
units
23800
14200
13700
Sales Units
28600
14200
10700
Income Higher Under
(Method)
Amount of Difference
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