Question
B Manufacturing Inc. makes a product that sells for $10 each. At the beginning of the year, there were 1,000 units in Inventory. These units
B Manufacturing Inc. makes a product that sells for $10 each. At the beginning of the year, there were 1,000 units in Inventory. These units had $3 of fixed manufacturing cost and $2 of variable manufacturing cost each.
During the year, B produced 10,000 units. Each unit had $3 of variable manufacturing cost. Total fixed manufacturing costs were $40,000. There was no Inventory at the end of the year.
Prepare an Income Statement for Variable Costing, and an Income Statement for Traditional Costing. Explain why the two NOI amounts are different, if applicable.
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