Chapter 10, Problem 6E

The fixed overhead budgeted for Ranier Industries at an expected capacity of 500,000 units is $1,500,000. Variable costing is used internally, and the net income is adjusted to an absorption costing net income at year-end. Data collected over the last three years show the following:

Determine the adjustment each year to convert the variable costing income to absorption costing net income. Compute the absorption costing net income for each year.