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How will absorption cost net income differ from variable cost net income

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Heath Company;DATA SUMMARY;Units 2012 2013;Beginning Inventory 400 600;Price $ 90 $ 90;Sold 1000 1900;Actual Production 1200 1700;Budgeted Production 1500 1500;Unit Variable Costs;Manufacturing $ 30 $ 30;Selling and Administrative $ 5 $ 5;Fixed Costs;Manufacturing $ 30,000 $ 30,000;Selling and Administrative $ 10,000 $ 10,000;Ending Inventory 600 400;Gross Margin (GM) and contribution margin (CM) for 2013 will be respectively;A. GM: $60,500, CM: $64,500 B. GM: $64,500, CM: $60,500;C. GM: $76,000, CM: $104,500 D. GM: $80,000, CM: $104,500;Heath Company;DATA SUMMARY;Units 2012 2013;Beginning Inventory 400 600;Price $ 90 $ 90;Sold 1000 1900;Actual Production 1200 1700;Budgeted Production 1500 1500;Unit Variable Costs;Manufacturing $ 30 $ 30;Selling and Administrative $ 5 $ 5;Fixed Costs;Manufacturing $ 30,000 $ 30,000;Selling and Administrative $ 10,000 $ 10,000;Ending Inventory 600 400;The difference in operating income for 2012 between absorption and variable costing will be;A. $8,000 more under variable costing. B. $8,000 more under absorption costing.;C. $4,000 more under absorption costing. D. $4,000 more under variable costing.;Beginning inventory was 15,000 units and ending inventory was 10,000 units. The fixed manufacturing overhead was;$8 per unit. How will absorption cost net income differ from variable cost net income?;A. absorption cost net income will be $80,000 higher.;B. variable cost net income will be $80,000 higher.;C. absorption cost net income will be $40,000 higher.;D. variable cost net income will be $40,000 higher.

 

Paper#20501 | Written in 18-Jul-2015

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