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Refer to the data in Exercise 6-1 for Ida Company. The absorption costing income statement prepared by the company's accountant for last year appears as shown: Sales Cost of goods sold $191,250 157,500 Gross margin 33,750 Selling and administrative expense Net operating income 24,500 $ 9.250 Required: 1. Under absorption costing, how much fixed manufacturing overhead cost is included in the company's inventory at the end of Page 279 last year? 2. Prepare an income statement for last year using variable costing. Explain the difference in net operating income between the two costing methods.

Refer to the data in Exercise 6-1 for Ida Company. The absorption costing income statement prepared by the company's accountant for last year appears as shown: Sales Cost of goods sold $191,250 157,500 Gross margin 33,750 Selling and administrative expense Net operating income 24,500 $ 9.250 Required: 1. Under absorption costing, how much fixed manufacturing overhead cost is included in the company's inventory at the end of Page 279 last year? 2. Prepare an income statement for last year using variable costing. Explain the difference in net operating income between the two costing methods.

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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Refer to the data in Exercise 6-1 for Ida Company. The absorption costing income statement prepared by the company's accountant for last year appears as shown: Sales Cost of goods sold $191,250 157,500 Gross margin 33,750 Selling and administrative expense Net operating income 24,500 $ 9.250 Required: 1. Under absorption costing, how much fixed manufacturing overhead cost is included in the company's inventory at the end of Page 279 last year? 2. Prepare an income statement for last year using variable costing. Explain the difference in net operating income between the two costing methods.
Transcribed Image Text:Refer to the data in Exercise 6-1 for Ida Company. The absorption costing income statement prepared by the company's accountant for last year appears as shown: Sales Cost of goods sold $191,250 157,500 Gross margin 33,750 Selling and administrative expense Net operating income 24,500 $ 9.250 Required: 1. Under absorption costing, how much fixed manufacturing overhead cost is included in the company's inventory at the end of Page 279 last year? 2. Prepare an income statement for last year using variable costing. Explain the difference in net operating income between the two costing methods.
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