Question
New Amsterdam Company was just awarded a patent on a highly-specialized device. The engineer has set a strict production guideline. After making a mid-range plan
New Amsterdam Company was just awarded a patent on a highly-specialized device. The engineer has set a strict production guideline. After making a mid-range plan for the company, the company expects the following for the next 2 years.
Selling price per unit............................................$120
Variable cost per unit:
Direct materials.................................................$10
Direct Labor......................................................$30
Variable overhead...............................................$6
Fixed factory overhead cost per unit.....................................................$68,400
Selling and administrative expense per year(all fixed).............................$14,600
Year ......................................1......................2
Production (unit).................. 1,900................ 2,000
Sales (unit) .........................1,100................ 2,800
What is the expected income under absorption costing in year 2 ?
A) $ 60,800
B) $ 100,400
C) $ 101,800
D) $ 95,400
E) None of the above
What is the expected income under Variable costing in year 2 ?
A) $ 130,600
B) $ 60,800
C) $ 124,200
D) $ 129,200
E) None of the above
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