Absorption and variable costing. (CMA) Osawa, Inc., planned and actually manufactured 200,000 units of its single product
Question:
Absorption and variable costing. (CMA) Osawa, Inc., planned and actually manufactured 200,000 units of its single product in 2007, its first year of operation. Variable manufacturing costs were $24 per unit produced. Variable marketing and administrative costs were $10 per unit sold. Planned and actual fixed manufacturing costs were $600,000. Planned and actual fixed marketing and administrative costs totalled $400,000 in 2007. Osawa sold 120,000 units of product in 2007 at a selling price of $48 per unit.
Required 1. Osawa’s 2007 operating income using absorption costing is
(a) $920,000,
(b) $418,182,
(c) $1,254,000,
(d) $1,760,000,
(e) none ofthese.
2. Osawa’s 2007 operating income using variable costing is
(a) $2,600,000,
(b) $1,504,256
(c) $680,000,
(d) $2,040,000,
(e) none of these.
Step by Step Answer:
Cost Accounting A Managerial Emphasis
ISBN: 9780131971905
4th Canadian Edition
Authors: Charles T. Horngren, George Foster, Srikant M. Datar, Howard D. Teall