(Absorption vs. variable costing) The following data were taken from records of the Lucky Lady Vacuum Cleaner Company. The company uses variable costing. The data relate to the company’s first year of operation.

How much higher (or lower) would the company’s first-year net income have been if the company had used absorption costing rather than variable costing?
Show computations.LO1

Transcribed Image Text:

Units produced: Units sold: 20,000 17,500 Variable cost per unit: Direct material $38 Direct labor 17 Variable overhead 7 Variable selling costs 22 12 Fixed costs: Selling and administrative $750,000 Manufacturing 250,000