S&P Enterprises sold 10,000 units of inventory during a given period. The level of inventory of the manufactured product remained unchanged. The manufacturing costs were as follows: Variable Fixed Unit manufacturing costs of the period $ 11.00 $ 7.00 Unit operating expenses of the period 3.00 2.50 Which of the following statements is true? a. Net income under absorption costing will be $40,000 more than under variable costing. b. Net income will be the same under both variable and absorption costing. c. Net income under variable costing will be $45,000 less than net income under absorption costing. d. The difference in net income cannot be determined.

Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter7: Variable Costing For Management analysis
Section: Chapter Questions
Problem 3BE: Variable costingsales exceed production The beginning inventory is 52,800 units. All of the units...
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S&P Enterprises sold 10,000 units of inventory during a given period.
The level of inventory of the manufactured product remained
unchanged. The manufacturing costs were as follows:
Variable
Fixed
Unit manufacturing costs of the period
$ 11.00
$ 7.00
Unit operating expenses of the period
3.00
2.50
Which of the following statements is true?
a. Net income under absorption costing will be $40,000 more than
under variable costing.
b. Net income will be the same under both variable and absorption
costing.
c. Net income under variable costing will be $45,000 less than net
income under absorption costing.
d. The difference in net income cannot be determined.
Transcribed Image Text:S&P Enterprises sold 10,000 units of inventory during a given period. The level of inventory of the manufactured product remained unchanged. The manufacturing costs were as follows: Variable Fixed Unit manufacturing costs of the period $ 11.00 $ 7.00 Unit operating expenses of the period 3.00 2.50 Which of the following statements is true? a. Net income under absorption costing will be $40,000 more than under variable costing. b. Net income will be the same under both variable and absorption costing. c. Net income under variable costing will be $45,000 less than net income under absorption costing. d. The difference in net income cannot be determined.
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