The following information is given for a company for the year ended December 31: Beginning finished goods inventory in units 0 Units produced 4,800 Units sold 4,000 Sales $ 400,000 Materials cost $ 96,000 Variable conversion cost used $ 48,000 Fixed manufacturing cost $ 72,000 Indirect operating costs (fixed) $ 80,000
The following information is given for a company for the year ended December 31: Beginning finished goods inventory in units 0 Units produced 4,800 Units sold 4,000 Sales $ 400,000 Materials cost $ 96,000 Variable conversion cost used $ 48,000 Fixed manufacturing cost $ 72,000 Indirect operating costs (fixed) $ 80,000
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 1E: At the end of the first year of operations, 21,500 units remained in the finished goods inventory....
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Question
The following information is given for a company for the year ended December 31:
|
|
|
|
Beginning finished goods inventory in units |
|
0 |
|
Units produced |
|
4,800 |
|
Units sold |
|
4,000 |
|
Sales |
$ |
400,000 |
|
Materials cost |
$ |
96,000 |
|
Variable conversion cost used |
$ |
48,000 |
|
Fixed |
$ |
72,000 |
|
Indirect operating costs (fixed) |
$ |
80,000 |
|
Required:
Calculate the additional Operating Income which will be provided by using absorption costing method instead of variable costing method.
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