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Star Corporation incurred fixed manufacturing costs of $20,000 during 2019. Other information for 2019 includes: The budgeted denominator level is 2,000 units. Actual units produced
Star Corporation incurred fixed manufacturing costs of $20,000 during 2019. Other information for 2019 includes: The budgeted denominator level is 2,000 units. Actual units produced total 1,700 units. Units sold total 1,400 units. Beginning inventory was zero. The company uses absorption costing and the fixed manufacturing cost rate is based on the budgeted denominator level. Do you expect different operating income using absorption costing and variable costing? If yes, which costing system has higher operating income and by how much? Absorption costing will have higher operating income by $3000 O Variable costing will have higher operating income by $3,000 Operating income will be the same for both costing systems
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