Grainger Company produces only one product and sells that product for $90 per unit. Cost information for the product is as follows: Direct Material $16 per Unit Direct Labor $26 per Unit Variable Overhead $4 per Unit Fixed Overhead $27,200 Selling expenses are $5 per unit and are all variable. Administrative expenses of $20,000 are all fixed. Grainger produced 4,000 units; sold 3,200; and had no beginning inventory. A. Compute net income under i. Absorption Costing $ ii. Variable Costing B. Which costing method provide higher net income? By how much? The method provided more net income by $
Grainger Company produces only one product and sells that product for $90 per unit. Cost information for the product is as follows: Direct Material $16 per Unit Direct Labor $26 per Unit Variable Overhead $4 per Unit Fixed Overhead $27,200 Selling expenses are $5 per unit and are all variable. Administrative expenses of $20,000 are all fixed. Grainger produced 4,000 units; sold 3,200; and had no beginning inventory. A. Compute net income under i. Absorption Costing $ ii. Variable Costing B. Which costing method provide higher net income? By how much? The method provided more net income by $
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Step 1: Introduce to income statement
VIEWStep 2: Working for sales revenue and variable selling expenses
VIEWStep 3: Working for net income under absorption costing
VIEWStep 4: Working for net income under variable costing
VIEWStep 5: Working for Difference in net income under absorption and variable costing method
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