Question
ABC Inc., began the year with 10,000 units in stock but finished with 5,000 units. It produced 45,000 units for the period. Its selling price
ABC Inc., began the year with 10,000 units in stock but finished with 5,000 units. It produced 45,000 units for the period. Its selling price is $12 per unit, variable manufacturing cost is $5 per unit, and variable selling is $3 per unit. Fixed manufacturing and selling costs are $100,000 and $72,000 respectively. The firm notes that variable cost per unit (both mfg and SGA) was the same this and the prior year. What is the income under variable costing?
2. Refer to the prior problem. The firm informs you that inventory values under absorption costing decreased by $39,000. Compute (Income as reported under variable costing - Income as reported under absorption costing), noting that it is change in FMOH between the opening and closing inventory accounts.
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