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The SIMple Company manufactures a single product; the standard costs per unit being variable manufacturing $8, fixed manufacturing $6. Selling and administrative costs are $2 per unit sold. The selling price is $20 per unit. Actual and budgeted fixed overhead is $900,000 for the year. Information about the company’s production activity for the year is:   Units produced 150,000 Units sold 125,000 Units in opening inventory 5,000   Assuming all information is provided above, the difference in profit between absorption and variable costing would be expected to be:   Question 7 options:   1)  25,000 x $8   2)  30 000 x $8   3)  25 000 x $6   4)  30 000 x $6

The SIMple Company manufactures a single product; the standard costs per unit being variable manufacturing $8, fixed manufacturing $6. Selling and administrative costs are $2 per unit sold. The selling price is $20 per unit. Actual and budgeted fixed overhead is $900,000 for the year. Information about the company’s production activity for the year is:   Units produced 150,000 Units sold 125,000 Units in opening inventory 5,000   Assuming all information is provided above, the difference in profit between absorption and variable costing would be expected to be:   Question 7 options:   1)  25,000 x $8   2)  30 000 x $8   3)  25 000 x $6   4)  30 000 x $6

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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The SIMple Company manufactures a single product; the standard costs per unit being variable manufacturing $8, fixed manufacturing $6. Selling and administrative costs are $2 per unit sold. The selling price is $20 per unit. Actual and budgeted fixed overhead is $900,000 for the year. Information about the company’s production activity for the year is:
 
Units produced
150,000
Units sold
125,000
Units in opening inventory
5,000

 
Assuming all information is provided above, the difference in profit between absorption and variable costing would be expected to be:
 

Question 7 options:

 

1) 

 25,000 x $8
 

2) 

 30 000 x $8
 

3) 

 25 000 x $6
 

4) 

 30 000 x $6
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