Analyzing Income under Absorption and Variable Costing Varia

Analyzing Income under Absorption and Variable Costing

Variable manufacturing costs are $13 per unit, and fixed manufacturing costs are $75,000. Sales are estimated to be 12,000 units.

If an amount is zero, enter \"0\".

a. How much would absorption costing income from operations differ between a plan to produce 12,000 units and a plan to produce 15,000 units?

$__

b. How much would variable costing income from operations differ between the two production plans?

$__

Solution

a). Fixed Cost = $75000

Deffrence in Production = 15000 - 12000 = 3000 units

Final Production = 15000 units

Absorption Costing Income from operation differ :-

= ($75000/15000)*3000

= $15000

b). Variable Costing income from operation differ is $0.