Taiga Tools manufactures camping equipment. In 2023, fixed overhead was applied to products at the rate of $12 per unit. Variable cost per unit remained constant throughout the year. In August 2023, income under variable costing was $278,000. August's beginning and ending inventories were 24,600 and 16,200 units, respectively. a. Calculate income under absorption costing assuming no variances. b. Assume instead that the company's August beginning and ending inventories were 14,500 and 19,800 units, respectively. Calculate income under absorption costing.

Taiga Tools manufactures camping equipment. In 2023, fixed overhead was applied to products at the rate of $12 per unit. Variable cost per unit remained constant throughout the year. In August 2023, income under variable costing was $278,000. August's beginning and ending inventories were 24,600 and 16,200 units, respectively. a. Calculate income under absorption costing assuming no variances. b. Assume instead that the company's August beginning and ending inventories were 14,500 and 19,800 units, respectively. Calculate income under absorption costing.

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter3: Cost Behavior And Cost Forecasting

Section: Chapter Questions

Problem 54E: Income Statements under Absorption and Variable Costing In the coming year, Kalling Company expects...

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