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Company has 130 units in Finished Goods Inventory at the beginning of the accounting period. During the accounting​ period, Hacken produced 190 units and sold 320 units for $ 250 each. All units incurred $ 55 in variable manufacturing costs and $ 30 in fixed manufacturing costs. Hacken also incurred $ 7 comma 700 in Selling and Administrative​ Costs, all fixed. Calculate the operating income for the year using absorption costing and variable costing.

Respuesta :

Answer:

The operating income for the year using absorption costing and variable costing is $45,100 and $49,000 respectively

Explanation:

The computation of the operating income for the year using absorption costing and variable costing is shown below:

Absorption costing:

Sales (320 units × $250)                                            $80,000

Less: Total manufacturing cost (320 units × $85)    ($27,200)

Contribution margin                                                   $52,800

Less: Selling and Administrative​ Costs                     ($7,700)

Net income                                                                   $45,100

Variable costing:

Sales (320 units × $250)                                            $80,000

Less: Variable cost (320 units × $55)                        ($17,600)

Contribution margin                                                    $62,400

Less: Fixed manufacturing costs  (190 units × $30)  $5,700    

Less: Selling and Administrative​ Costs                      ($7,700)

Net income                                                                   $49,000

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