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Bianca Bicycle Company manufactures mountain bikes with a variable cost of $2,800. The cost per unit remained the sam current year as in the previous year. The bicycles sell for $3,550 each. Budgeted fixed manufacturing overhead for the yea $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 reportem income under the two methods. Treat each condition as an independent case. Note: Round intermediate calculations to 2 decimal places. Production units Sales Units 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 sam current year as in the previous year. The bicycles sell for $3,550 each. Budgeted fixed manufacturing overhead for the yea $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 reportem income under the two methods. Treat each condition as an independent case. Note: Round intermediate calculations to 2 decimal places. Production units Sales Units Income Higher Under (Method) Amount of Difference

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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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 Sales Units units 23800 14200 13700 28600 14200 10700 Income Higher Under (Method) Amount of Difference
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 Sales Units units 23800 14200 13700 28600 14200 10700 Income Higher Under (Method) Amount of Difference
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