Entel Corporation creates an accounting computer program. This year, Entel Corporation produced 20,000 units of their program

Question:

Entel creates an accounting computer program. This year, Entel produced 20,000 units of their program and sold 22,000 units. Each unit sells for $250. Selected operational and financial data are shown below.
Variable costs per unit:
Direct materials .......$ 15.00
Direct labor ......... 40.00
Manufacturing overhead .... 5.00
Selling and administrative ... 2.00
Fixed costs per unit:
Manufacturing overhead ...$200,000
Selling and administrative ... $150,000

Required
A. Calculate Entel’s net income using absorption costing.
B. Will income be higher or lower if calculated using variable costing?
C. By how much?

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...