ACCT 2230 Study Guide - Final Guide: Total Absorption Costing, Earnings Before Interest And Taxes, Variable Cost

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20 May 2020

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Question: last year, silver company"s total variable production costs were 7,500, and its total fixed is true? manufacturing overhead costs were 4,500. The company produced 3,00 units during the year and sold 2,400 units. There were no units in the beginning inventory. Answer: the ending inventory under variable costing will be lower than the ending inventory under absorption costing. Operating income & ei (absorption) > operating income & ei (variable) **major difference comes from the fixed overhead cost. **since you are producing more than you are selling, ending inventory is going up. Question: last year, ben company"s operating income under absorption costing was ,400 lower zero. How many units did the company produce during the year? than its operating income under variable costing. The company sold 8,00 units during the year, and its variable costs were per unit, of which was variable selling expense. Fixed manufacturing overhead was per unit in beginning inventory under absorption costing.

Related Questions

Crossbow Corp. produces a single product. Data concerning June's operations follow: Units in beginning inventory 0 Units produced 6,000 Units sold 5,000 Variable costs per unit: Manufacturing $ 7 Selling and administrative $ 3 Fixed costs in total: Manufacturing $12,000 Selling and administrative $ 3,000 For the year in question, net operating income under variable costing will be: higher than net operating income under absorption costing. lower than net operating income under absorption costing. the same as net operating income under absorption costing. The relation between absorption costing and variable costing net operating income cannot be determined.

Harris Corporation produces a single product. Last year, Harrismanufactured 27,970 units and sold 22,200 units. Production costsfor the year were as follows:

Fixed manufacturingoverhead	$335,640
Variablemanufacturing overhead	$240,542
Direct labor	$131,459
Directmaterials	$234,948

Sales were $1,043,400, for the year, variable selling andadministrative expenses were $113,220, and fixed selling andadministrative expenses were $198,587. There was no beginninginventory. Assume that direct labor is a variable cost.

Under variable costing, thecompany's net operating income for the year would be:

A $34,043 lower than under absorption costing

B $34,043 higher than under absorption costing

C $69,240 higher than under absorption costing

D $69,240 lower than under absorption costing