Manta Ray Company manufactures diving masks with a variable cost of $35. The masks sell for $44. Budgeted fixed manufacturing overhead for the most recent year was $799,000. Actual production was equal to planned production. 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. (Do not round intermediate calculations.) 1. Production Sales 94,000 units 92,000 units 2. Production Sales 3. Production 85,000 units 91,600 units 82,000 units Sales 82,000 units Answer is not complete. Income Higher Under Amount of Difference (Method) 1. Absorption costing 2. Variable costing 3. Same under both
Manta Ray Company manufactures diving masks with a variable cost of $35. The masks sell for $44. Budgeted fixed manufacturing overhead for the most recent year was $799,000. Actual production was equal to planned production. 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. (Do not round intermediate calculations.) 1. Production Sales 94,000 units 92,000 units 2. Production Sales 3. Production 85,000 units 91,600 units 82,000 units Sales 82,000 units Answer is not complete. Income Higher Under Amount of Difference (Method) 1. Absorption costing 2. Variable costing 3. Same under both
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Manta Ray Company manufactures diving masks with a variable cost of $35. The masks sell for $44. Budgeted fixed manufacturing
overhead for the most recent year was $799,000. Actual production was equal to planned production.
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. (Do not round intermediate calculations.)
94,000 units
1. Production
Sales
92,000 units
2. Production
85,000 units
Sales
91,600 units
3. Production
82,000 units
Sales
82,000 units
Answer is not complete.
Income Higher Under
Amount of
(Method)
1.
Absorption costing
23
2.
Variable costing
3.
Same under both
Difference
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Step 1: Introduce to absorption costing and variable costing method
VIEWStep 2: Working for difference in net income under absorption and variable costing for case 1
VIEWStep 3: Working for difference in net income under absorption and variable costing for case 2
VIEWStep 4: Working for difference in net income under absorption and variable costing for case 3
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