Chapter 7, Problem 3BE

Variable costing–sales exceed production

The beginning inventory is 52,800 units. All of the units that were manufactured during the period and 52,800 units of the beginning inventory were sold. The beginning inventory fixed manufacturing costs are $14.70 per unit, and variable manufacturing costs are $30 per unit. Determine (A) whether variable costing operating income is less than or greater than absorption costing operating income, and (B) the difference in variable costing and absorption costing operating income.