VSB 3006 Dr. JME

Handout Variable Costing

Below is data for the JME Company for September and October of 20X1. JME uses a FIFO cost assumption.

September October

Sales in units 90 105

Production in units 100 100

Sales price per unit $20 $20

Var Prod cost/unit $4.00 $4.25

Fixed Prod cost $110 $130

Var Period cost/unit $3.00 $3.15

Fixed Period cost $175 $200

REQUIRED - You are to compute income under absorption costing and variable costing. In addition, justify or explain any differences.