The Balakrishnan Corporation began business on 1 January 20X0, to produce and sell a single product. Reported operating income figures under both absorption and variable costing for the first 4 years of operation are as follows:

Standard production costs per unit, sales prices, application (absorption) rates and expected volume levels were the same in each year. There were no flexible-budget variances for any type of cost. All nonmanufacturing expenses were fixed and there were no nonmanufacturing cost variances in any year.

1. In what year(s) did ‘units produced’ equal ‘units sold’?

2. In what year(s) did ‘units produced’ exceed ‘units sold’?

3 What is the amount of the 31 December 20X3, finished-goods inventory? (Give absorption costing value.)

4. What is the difference between ‘units produced’ and ‘units sold’ in 20X3, if you know that the absorption-costing fixed-manufacturing overhead application rate is €3 per unit? (Give answer in units.)

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Year 20X0 20X1 20X2 20X3 Absorption costing €80,000 70,000 50,000 40,000 Variable costing €60,000 60,000 50,000 70,000