Content Ltd manufactures and sells monitors and uses standard costing. For the month of May there was no beginning inventory, there were 3,200 units produced and 2,500 units sold. The manufacturing variable cost per unit is $350 and the variable operating cost per unit was $302.50. The actual and fixed manufacturing cost is $420,000 and the fixed operating cost is $85,000. The selling price per unit is $1000. The budgeted units to be produced are 2,800. There are no price-, efficiency-, or spending variances. Any production- volume variance is written off to cost of goods sold in the month in which it occurs. Reconcile the difference in operating income calculated using variable costing and absorption costing. Then explain why there is a difference in the operating profit under the two methods.
Content Ltd manufactures and sells monitors and uses
Reconcile the difference in operating income calculated using variable costing and absorption costing. Then explain why there is a difference in the operating profit under the two methods.
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