Absorption and Variable Costing Comparisons: Production Equals Sales

Assume that Smuckers manufactures and sells $45,000$ cases of peanut butter each quarter. The following data are available for the third quarter of the year.

Total fixed manufacturing overhead $$675,000$

Fixed selling and administrative $1,225,000$

Sales price per case $85$

Direct materials per case $20$

Direct labor per case $10$

Variable manufacturing overhead per case $4$

Required

a$.$ Compute the cost per case under both absorption costing and variable costing.

Absorption $Answer

$36$

Variable $Answer

$30$

b$.$ Compute net income under both absorption costing and variable costing.

Do not use a negative sign with your answers.

SMUCKERS

Absorption Costing Income Statement

For the Third Quarter of the Year

Sales Answer

Answer

Answer

Answer

Answer

Answer

Answer

Net income Answer

SMUCKERS

Variable Costing Income Statement

For the Third Quarter of the Year

Sales Answer

Answer

Answer

Answer

Answer

Fixed expenses:

Answer

Answer

Selling and administrative Answer

Answer

Net income Answer