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Analyzing Income under Absorption and Variable Costing

Variable manufacturing costs are $112 per unit, and fixed manufacturing costs are $83,300. Sales are estimated to be 3,400 units.

If an amount is zero, enter "0". Round intermediate calculations to the nearest cent and your final answers to the nearest dollar.

a. How much would absorption costing operating income differ between a plan to produce 3,400 units and a plan to produce 4,900 units?

b. How much would variable costing operating income differ between the two production plans?

1B-The beginning inventory is 21,800 units. All of the units that were manufactured during the period and 21,800 units of the beginning inventory were sold. The beginning inventory fixed manufacturing costs are $36 per unit, and variable manufacturing costs are $90 per unit.

Determine the difference in variable costing and absorption costing operating income.

Analyzing Income under Absorption and Variable Costing Variable manufacturing costs are $112 per unit, and fixed manufacturing costs are $83,300. Sales are estimated to be 3,400 units. If an amount is zero, enter "O". Round intermediate calculations to the nearest cent and your final answers to the nearest dollar. plan to produce 3,400 units and a plan to produce 4,900 units? a. How much would absorption costing operating income differ between $ b. How much would variable costing operating income differ between the two production plans? Feedback Check My Work a. Remember that under variable costing, regardless of whether 3,400 units or 4,900 units are manufactured, no fixed manufacturing costs are allocated to the units manufactured. Instead, all fixed manufacturing costs are treated as a period expense. Therefore the change in units times the per unit fixed costs for the greater production level is the difference in income between the two costing methods. b. Remember that since all fixed manufacturing costs are treated as period expenses under variable costing, there are no differences in income between the two plans. Variable Costing-Sales Exceed Production The beginning inventory is 21,800 units. All of the units that were manufactured during the period and 21,800 units of the beginning inventory were sold. The beginning inventory fixed manufacturing costs are $36 per unit, and variable manufacturing costs are $90 per unit. a. Determine whether variable costing operating income is less than or greater than absorption costing operating income. Variable costing operating income is greater than absorption costing. b. Determine the difference in variable costing and absorption costing operating income

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