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Schmitt, Inc., recently started its business and has the following information abouts its one and only product, 'Jungle Juice' (JJ) for the first year. Opening
Schmitt, Inc., recently started its business and has the following information abouts its one and only product, 'Jungle Juice' (JJ) for the first year.
Opening inventory | zero |
Production volume | 22,000 units |
Sales volume | 20,000 units |
Average selling | $25 per unit |
Variable costs | |
Direct material costs | $8.00 |
Direct labour costs | $4.00 |
Variable manufacturing overhead costs | $2.00 |
Variable selling and administration costs | $3.00 |
Fixed manufacturing costs | $55,000 |
Fixed marketing costs | $33,000 |
What would be the difference in operating profit for the first year between variable costing and absorption costing? [Enter a positive number if variable costing gives a higher profit or enter a negative number if absorption costing gives a higher profit.]
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