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XYZhas the following financial information: Current Year Prior Year # Units in Beginning Inventory ? 0 # Units Sold 570,000 580,000 # Units Manufactured (Actual)

XYZhas the following financial information:

Current Year

Prior Year

# Units in Beginning Inventory

?

0

# Units Sold

570,000

580,000

# Units Manufactured (Actual)

610,000

590,000

# Units Manufactured (Budget)

640,000

600,000

Selling Price

(per unit)

10.00

9.90

Variable Manufacturing Costs

(per unit)

5.00

4.80

Variable Sales+Admin Costs

(per unit)

1.00

1.00

Fixed Manufacturing Costs (Budget and Actual)

(total)

1,600,000

1,560,000

Fixed sales+admin costs (actual)

(total)

360,000

350,000

Net income (Variable Costing)

322,000

468,000

Inventory is recorded at FIFO

Required:

  1. Calculate the value of the Ending Inventory under Absorption Costing and Variable costing for the prior year and current year
  2. Prepare an income statement under Absorption Costing for the current year
  3. Reconcile the difference in Operating Income between Variable costing and Absorption Costing for the current year

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