16oz mug 24oz mug TOTAL selling price 9.75 11.20 direct materials/unit 1.10 1.45
ID: 2370164 • Letter: 1
Question
16oz mug 24oz mug TOTAL
selling price 9.75 11.20
direct materials/unit 1.10 1.45
direct labor/unit .60 .80
variable overhead unit .30 .40
variable selling & distribution/unit 1.65 1.75
units sold 22,500 16,400
units produced 24,000 16,400
fixed manufacturing overhead 85,000
fixed selling and distribution
$148,000
There were no beginning inventories. Overhead is assigned to products using direct labor dollars
a. calculate net income befoe taxes using absorption costing
b. calculate net income before taxes using variable costing
c. prepare a table that reconciles any difference between the two net income figures calculated in parts a and b
d. write a short memo explaining in lay terms any difference between the two net income figures calculated in parts a and b.
Explanation / Answer
refer to below links http://accounting4management.com/absorption_costing_approach_cost_plus_pricing.htm Marginal Costing Definition: Marginal Costing is a costing method that includes only variable manufacturing costs
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