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 Units sold Units in opening 5,000 inventory 150,000 125,000 Assuming all information is provided above, the difference in profit between absorption and variable costing would be expected to be:

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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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
Units
sold
Units in
opening 5,000
inventory
150,000
125,000
Assuming all information is provided above, the difference in profit between
absorption and variable costing would be expected to be:
Transcribed Image Text: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 Units sold Units in opening 5,000 inventory 150,000 125,000 Assuming all information is provided above, the difference in profit between absorption and variable costing would be expected to be:
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