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Year 2020 2021 2022 Budgeted Production 20,000 20,000 20,000 Variable production costs Fixed OH production costs Variable selling & admin. expense Fixed selling & admin. expense a. $27,500 b. $47,000 c. $23,000 d. $50,000 Actual Production 16,000 25,000 15,000 e. $42,500 f. ($20,000) g. $53,750 Actual Sales 14,000 22,000 19,000 $8 per unit $100,000 per year The company uses the FIFO inventory method. 2020 was the first year of operation. If operating income under variable costing for year 2021 is $35,000, what was the 2021 operating income under the absorption costing method assuming that overhead was applied to production using a rate based on actual production for each year? $4 per unit $60,000 per year

Year 2020 2021 2022 Budgeted Production 20,000 20,000 20,000 Variable production costs Fixed OH production costs Variable selling & admin. expense Fixed selling & admin. expense a. $27,500 b. $47,000 c. $23,000 d. $50,000 Actual Production 16,000 25,000 15,000 e. $42,500 f. ($20,000) g. $53,750 Actual Sales 14,000 22,000 19,000 $8 per unit $100,000 per year The company uses the FIFO inventory method. 2020 was the first year of operation. If operating income under variable costing for year 2021 is $35,000, what was the 2021 operating income under the absorption costing method assuming that overhead was applied to production using a rate based on actual production for each year? $4 per unit $60,000 per year

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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Year 2020 2021 2022 Budgeted Production 20,000 20,000 20,000 a. $27,500 b. $47,000 UNITS Variable production costs Fixed OH production costs Variable selling & admin. expense Fixed selling & admin. expense Actual Production 16,000 25,000 15,000 c. $23,000 d. $50,000 e. $42,500 f. ($20,000) g. $53,750 h. None of the above Actual Sales 14,000 22,000 19,000 The company uses the FIFO inventory method. 2020 was the first year of operation. If operating income under variable costing for year 2021 is $35,000, what was the 2021 operating income under the absorption costing method assuming that overhead was applied to production using a rate based on actual production for each year? $8 per unit $100,000 per year $4 per unit $60,000 per year
Transcribed Image Text:Year 2020 2021 2022 Budgeted Production 20,000 20,000 20,000 a. $27,500 b. $47,000 UNITS Variable production costs Fixed OH production costs Variable selling & admin. expense Fixed selling & admin. expense Actual Production 16,000 25,000 15,000 c. $23,000 d. $50,000 e. $42,500 f. ($20,000) g. $53,750 h. None of the above Actual Sales 14,000 22,000 19,000 The company uses the FIFO inventory method. 2020 was the first year of operation. If operating income under variable costing for year 2021 is $35,000, what was the 2021 operating income under the absorption costing method assuming that overhead was applied to production using a rate based on actual production for each year? $8 per unit $100,000 per year $4 per unit $60,000 per year
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