Michelle just finished putting together the performance report for her division using standard costs within a variable costing system. Operating income is $1,600 for this period, when there was a decrease in FG Inventory of 540 units. Michelle reports fixed-MOH costs of $17,920. She is happy to find there are no variable cost variances this period, and actual production equaled budgeted production of 4,480 units. Last period's inventory carried the same cost per unit as this period's production. Michelle's supervisor wants her to determine operating income under absorption costing instead, so they can compare results before finalizing external financial statements. How much income should Michelle and her supervisor report under absorption costing? (Enter loss using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Operating income under absorption costing $
Michelle just finished putting together the performance report for her division using standard costs within a variable costing system. Operating income is $1,600 for this period, when there was a decrease in FG Inventory of 540 units. Michelle reports fixed-MOH costs of $17,920. She is happy to find there are no variable cost variances this period, and actual production equaled budgeted production of 4,480 units. Last period's inventory carried the same cost per unit as this period's production. Michelle's supervisor wants her to determine operating income under absorption costing instead, so they can compare results before finalizing external financial statements. How much income should Michelle and her supervisor report under absorption costing? (Enter loss using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Operating income under absorption costing $
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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Transcribed Image Text:Michelle just finished putting together the performance report for her division using standard costs within a variable costing system.
Operating income is $1,600 for this period, when there was a decrease in FG Inventory of 540 units. Michelle reports fixed-MOH costs
of $17,920. She is happy to find there are no variable cost variances this period, and actual production equaled budgeted production of
4,480 units. Last period's inventory carried the same cost per unit as this period's production. Michelle's supervisor wants her to
determine operating income under absorption costing instead, so they can compare results before finalizing external financial
statements. How much income should Michelle and her supervisor report under absorption costing? (Enter loss using either a negative
sign preceding the number e.g. -45 or parentheses e.g. (45).)
Operating income under absorption costing
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