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Variable Costing, Absorption Costing During its first year of operations, Snobegon, Inc. ( located in Lake Snobegon, Minnesota ) , produced 4 0 , 0

Variable Costing, Absorption Costing
During its first year of operations, Snobegon, Inc. (located in Lake Snobegon, Minnesota), produced 40,000 plastic snow scoops. Snow scoops are oversized shovel-type scoops that are used to push snow away. Unit sales were 39,000 scoops. Fixed overhead was applied at $0.70 per unit produced. Fixed overhead was underapplied by $2,600. This fixed overhead variance was closed to Cost of Goods Sold. There was no variable overhead variance. The results of the year's operations are as follows (on an absorption-costing basis):
Sales (39,000 units @ $20) $780,000
Less: Cost of goods sold 548,860
Gross margin $231,140
Less: Selling and administrative expenses (all fixed)184,500
Operating income $ 46,640
Required:
Question Content Area
1. Calculate the cost of the firm's ending inventory under absorption costing. Round unit cost to five decimal places. Round your final answer to the nearest dollar.
$fill in the blank 41278001cfad01d_1
Question Content Area
What is the cost of the ending inventory under variable costing? Round unit cost to five decimal places. Round your final answer to the nearest dollar.
$fill in the blank d034ff092076fd4_1
Question Content Area
2. Prepare a variable-costing income statement. Round the unit cost to five decimal places, when required. Round your final answers to the nearest dollar. Use the rounded values in subsequent computations.
Snobegon, Inc.
Variable-Costing Income Statement
For the First Year of Operations
$- Select -
- Select -
Contribution margin $fill in the blank 88a133036009fcb_5
Less:
- Select -
- Select -
Operating income $fill in the blank 88a133036009fcb_10
Question Content Area
What is the difference between the two income figures?
$fill in the blank c45144fea022fed_1

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