The level of inventory of a manufactured product has increased by 8,500 units during a period. The following data are also available: Variable Fixed Unit manufacturing costs of the period $14.00 $7.50 Unit operating expenses of the period 5.00 2.00 What would be the effect on income from operations if absorption costing is used rather than variable costing?

The level of inventory of a manufactured product has increased by 8,500 units during a period. The following data are also available: Variable Fixed Unit manufacturing costs of the period $14.00 $7.50 Unit operating expenses of the period 5.00 2.00 What would be the effect on income from operations if absorption costing is used rather than variable costing?

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 7E: The following data were adapted from a recent income statement of The Procter Gamble Company (PG):...

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When prices are falling (deflation), which costing method would produce the highest gross margin for the following? Choose first-in, first-out (FIFO); last-in, first-out (LIFO); or weighted average, assuming that B62 Company had the following transactions for the month. Calculate the gross margin for each of the following cost allocation methods, assuming B62 sold just one unit of these goods for $400. Provide your calculations. A. first-in, first-out (FIFO) B. last-in, first-out (LIFO) C. weighted average (AVG)
To determine the effect of different levels of production on the company’s income, move to cell B7 (Actual production). Change the number in B7 to the different production levels given in the table below. The first level, 100,000, is the current level. What happens to the operating income on both statements as production levels change? Enter the operating incomes in the following table. Does the level of production affect income under either costing method? Explain your findings.
When the number of units in ending inventory increases through the year, which of the following is true? A. Net income is the same for variable and absorption costing. B. Net income is higher for variable costing than for absorption costing. C. Net income is higher for absorption costing than for variable costing. D. There is no relationship between net Income and the costing method.
What would be the effect on income from operations if absorption costing is used?
What would be the effect on income?
What would be the effect on income from operations?
What would be the effect on income from operations
If absorption costing is used rather than variable costing?
What would be the effect??
Please show work.
The level of inventory of a manufactured product has increased by 7,616 units during a period. The following data are also available: Variable Fixed Unit manufacturing costs of the period $13.00 $7.00 Unit operating expenses of the period 1.00 5.00 The effect on operating income if variable costing is used rather than absorption costing would be a(n) Oa. $91,392 decrease Ob. $53,312 increase Oc. $91,392 increase Od. $53,312 decrease
The level of inventory of a manufactured product has increased by 7,859 units during a period. The following data are also available: Variable Fixed Unit manufacturing costs of the period $11.00 $8.00 Unit operating expenses of the period 4.00 2.00 The effect on operating income if variable costing is used rather than absorption costing would be a(n) Oa. $78,590 increase Ob. $62,872 increase Oc. $78,590 decrease Od. $62,872 decrease