The company produces a single product. Last year, the company's variable production costs totaled $8,000 and its...

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Finance

The company produces a single product.Last year, the company's variable production costs totaled $8,000and its fixed manufacturing overhead costs totaled $4,800. Thecompany produced 4,000 units during the year and sold 3,600 units.Assuming no units in the beginning inventory:
A.
under variable costing, the units in ending inventory will becosted at $3.20 each.
B.
the net operating income under absorption costing for the yearwill be $480 lower than net operating income under variablecosting.
C.
the ending inventory under variable costing will be $480 lowerthan the ending inventory under absorption costing.
D.
the net operating income under absorption costing for the yearwill be $800 lower than net operating income under variablecosting.

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4.4 Ratings (750 Votes)

First of all we shall calculate the value of ending inventory under absorption costing as follows Ending Inventory Opening Inventory Units Produced Units Sold 0 4000 3600 400 units Per unit value under absorption costing Total Cost incurred Total units produced See Answer

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A.	under variable costing, the units in ending inventory will becosted at $3.20 each.

B.	the net operating income under absorption costing for the yearwill be $480 lower than net operating income under variablecosting.
C.	the ending inventory under variable costing will be $480 lowerthan the ending inventory under absorption costing.
D.	the net operating income under absorption costing for the yearwill be $800 lower than net operating income under variablecosting.