Grainger Company produces only one product and sells that product for $110 per unit Cost information for the product is as follows: Direct Material $16 per Unit Direct Labor $24 per Unit Variable Overhead $4 per Unit Fixed Overhead $27,200 Selling expenses are $5 per unit and are all variable. Administrative expenses of $20,000 are all foed. Grainger produced 4,000 units; sold 3,200; and had no beginning inventory A. Compute net income under 1. Absorption Costing 99,360 X il Variable Costing 77.600 x B. Which costing method provide higher net income? By how much? The absorption costing method provided more net income by 21,760 x Feedback Oak wy Wars A. Remember that absorption costing includes all costs necessary for production Conversely, variable costing only uses the variable costs that relate directly to the production proces each assumption B. Depending on the cost method chosen there will be differences due to the way fied costs are treated under each method (absorption and variable)