Question
Lindsay Company reported the following information for the first three years of operations. Year 1 Year 2 Year 3 Units produced 8,000 10,000 12,000 Units
Lindsay Company reported the following information for the first three years of operations. Year 1 Year 2 Year 3 Units produced 8,000 10,000 12,000 Units sold 6,000 11,000 9,000 Variable production cost per unit $5 $5 $5 Fixed production cost $24,000 $24,000 $24,000 Variable selling cost per unit $2 $2 $2 Fixed selling cost $16,000 $16,000 $16,000 Normal overhead base (in units) 10,000 12,000 8,000 Assume fixed overhead is applied based on the normal overhead base for each year. ) If the company had an operating income of $14,000 in Year 2 under variable costing, what was their operating income under absorption costing in Year 2? If the company had an operating income of $45,600 in Year 3 under absorption costing, what was their operating income under variable costing in Year 3?
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