Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Variable and Absorption Costing Chandler Company sells its product for $100 per unit. Variable manufacturing costs per unit are $40, and fixed manufacturing costs at
Variable and Absorption Costing Chandler Company sells its product for $100 per unit. Variable manufacturing costs per unit are $40, and fixed manufacturing costs at the normal operating level of 12,000 units are $240,000. Variable selling expenses are $16 per unit sold. Fixed administrative expenses total $104,000. Chandler had no beginning inventory in 2016. During 2016, the company produced 12,000 units and sold 9,000. Would net income for Chandler Company in 2016 be higher if calculated using variable costing or using absorption costing? Calculate reported income using each method Do not use negative signs with any answers. Absorption Costing Income Statement Sales $900,000 Cost of Goods Sold: Beginning Inventory Variable Costs 480,000 Fixed Costs 240,000 Less: Ending Inventory 180,000 Cost of Goods Sold 360,000 variable selling expense 144,000 Selling expense 104,000 Administrative expense 104,000 $ 52,000 Net Income
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started