Student24
Feb 10, 2013, 08:18 PM
The following table shows the inventory balances, in units, for years 1, 2, and 3. Total fixed manufacturing costs were $27,260 for each of the last five years. The units in Year 1 beginning inventory were based on production of 470 units.
Year 1 Year 2 Year 3
Beginning inventory
60 0 130
Production
470 580 580
Sales
(530 ) (450 ) (580 )
Ending inventory
0 130 130
For each year, calculate the difference between absorption costing and variable costing operating income. Indicate which costing system has the higher net income.
I have to find the difference in operating income for Year 1 using variable costing. And I have to find it for Year 2 using absorption costing.
Year 1 Year 2 Year 3
Beginning inventory
60 0 130
Production
470 580 580
Sales
(530 ) (450 ) (580 )
Ending inventory
0 130 130
For each year, calculate the difference between absorption costing and variable costing operating income. Indicate which costing system has the higher net income.
I have to find the difference in operating income for Year 1 using variable costing. And I have to find it for Year 2 using absorption costing.