(Net income; absorption vs. variable costing) Francona Company produces softball bats. In 2007, fixed overhead was applied to products at the rate of $8 per unit. Variable cost per unit remained constant throughout the year. In July 2007, income before tax using variable costing was $94,000. July’s beginning and ending inventories were 10,000 and 5,200 units, re¬ spectively.

a. Calculate income before tax under absorption costing assuming no vari¬ ances. :

b. Assume instead that the company’s July beginning and ending invento¬ ries were 5,000 and 6,000 units, respectively. Calculate income before tax under absorption costing.

LO1.