QUESTION 27

1. Western Corporation

   Western Corporation has the following standard costs associated with the manufacture and sale of Product 361.

   Direct Material	$2.00 per unit
   Direct Labor	$2.00 per unit
   Variable Manufacturing Overhead	$1.00 per unit
   Fixed Manufacturing Overhead	$200,000
   Standard Capacity	50,000 units per year
   Variable Selling Expenses	$1.00 per unit
   Fixed Selling, General and Administrative Expenses	$75,000 per year

   During its for year of operations, Western manufactured 52,000 units and sold 49,000 units. The selling price per unit was $30.

   How much larger or smaller would Western's net income be if it uses absorption costing rather than variable costing?

   	a.	absorpotion costing net income would be $24,000 lower than net income under variable costing
   	b.	absorpotion costing net income would be $24,000 higher than net income under variable costing
   	c.	absorpotion costing net income would be $12,000 lower than net income under variable costing
   	d.	absorpotion costing net income would be $12,000 higher than net income under variable costing