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Sales price P15 per unit Variable costs: SG&A P2 per unit Production P4 per unit Fixed costs (total cost incurred for the year): SG&A P14,000
Sales price P15 per unit
Variable costs:
SG&A P2 per unit
Production P4 per unit
Fixed costs (total cost incurred for the
year):
SG&A P14,000
Production P20,000
During the first year, Sherrill Corporation manufactured 5,000 units and sold 3,800. There was no beginning or ending work-in-process inventory.
1. How much income before income taxes would be reported if Stanley uses absorption costing?
2. How much income before income taxes would be reported if variable costing was used?
3. Show why the two costing methods give different income amounts
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