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Variable and Absorption Costing Chandler Company sells its product for $109 per unit. Variable manufacturing costs per unit are $48, and fixed manufacturing costs at the normal operating level of 12,000 units are $240,000. Variable selling expenses are $18 per unit sold. Fixed administrative expenses total $104,000. Chandler had no beginning inventory in 2016. During 2016, the company produced 12,000 units and sold 9,000. Would net income for Chandler Company in 2016 be higher if calculated using variable costing or using absorption costing?

Variable and Absorption Costing Chandler Company sells its product for $109 per unit. Variable manufacturing costs per unit are $48, and fixed manufacturing costs at the normal operating level of 12,000 units are $240,000. Variable selling expenses are $18 per unit sold. Fixed administrative expenses total $104,000. Chandler had no beginning inventory in 2016. During 2016, the company produced 12,000 units and sold 9,000. Would net income for Chandler Company in 2016 be higher if calculated using variable costing or using absorption costing?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Variable and Absorption Costing Chandler Company sells its product for $109 per unit. Variable manufacturing costs per unit are $48, and fixed manufacturing costs at the normal operating level of 12,000 units are $240,000. Variable selling expenses are $18 per unit sold. Fixed administrative expenses total $104,000. Chandler had no beginning inventory in 2016. During 2016, the company produced 12,000 units and sold 9,000. Would net income for Chandler Company in 2016 be higher if calculated using variable costing or using absorption costing? Calculate reported income using each method. Do not use negative signs with any answers. Absorption Costing Income Statement Sales Cost of Goods Sold: Beginning Inventory Variable Costs Fixed Costs Less: Ending Inventory Cost of Goods Sold Answer Gross profit Answer Selling expense Administrative expense Net Income Variable Costing Income Statement Sales Cost of Goods Sold: Beginning Inventory Variable Costs Answer Less: Ending inventory Variable cost of goods sold Answer Variable selling expense Answer Contribution margin Fixed costs: Answer Manufacturing cost Administrative Expense Total Fixed Cost Net Income Answer O Answer Answer Answer Answer 0 Answer Answer Answer Answer $Answer Answer Answer Answer Answer $Answer $Answer Answer Answer Answer Answer $Answer
Transcribed Image Text:Variable and Absorption Costing Chandler Company sells its product for $109 per unit. Variable manufacturing costs per unit are $48, and fixed manufacturing costs at the normal operating level of 12,000 units are $240,000. Variable selling expenses are $18 per unit sold. Fixed administrative expenses total $104,000. Chandler had no beginning inventory in 2016. During 2016, the company produced 12,000 units and sold 9,000. Would net income for Chandler Company in 2016 be higher if calculated using variable costing or using absorption costing? Calculate reported income using each method. Do not use negative signs with any answers. Absorption Costing Income Statement Sales Cost of Goods Sold: Beginning Inventory Variable Costs Fixed Costs Less: Ending Inventory Cost of Goods Sold Answer Gross profit Answer Selling expense Administrative expense Net Income Variable Costing Income Statement Sales Cost of Goods Sold: Beginning Inventory Variable Costs Answer Less: Ending inventory Variable cost of goods sold Answer Variable selling expense Answer Contribution margin Fixed costs: Answer Manufacturing cost Administrative Expense Total Fixed Cost Net Income Answer O Answer Answer Answer Answer 0 Answer Answer Answer Answer $Answer Answer Answer Answer Answer $Answer $Answer Answer Answer Answer Answer $Answer
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