Question
RDS Company sells its products for $70 each. This year's production level was 28,000 units and 25,000 units were sold. The planned production level (denominator
RDS Company sells its products for $70 each. This year's production level was 28,000 units and 25,000 units were sold. The planned production level (denominator level) for the year was 30,000 units. The beginning inventory was 4,000 units. Unit manufacturing costs are: Variable manufacturing costs $15.00 per unit Total fixed manufacturing costs $150,000 per year Variable Marketing expenses $6.00 per unit Fixed Marketing expenses $60,000 per year Required:
a. Calculate income using absorption costing.
b. Calculate income using variable costing.
c. Explain the difference in your answers for a and b.
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