Tuttle Manufacturing Company produces only one product, which sells for \($50.\) Product costs at the normal level of manufacturing operations (10,000 units) are the following:

Selling expenses (100% variable) are \($3\) per unit; administrative expenses (100% fixed) are \($30,000.\)  During the year, Tuttle produced 11,000 units and sold 9,000 units. Tuttle had no beginning inventory of product.
Required

a. Determine net income (ignoring income taxes) using 

1. Absorption costing.
2. Variable costing.

b. Compare the total net income derived under the two methods.

Transcribed Image Text:

Direct materials..... Direct labor.... Variable overhead Fixed overhead.. $14 per unit $12 per unit $ 4 per unit $49,500