32. Consider the following: Beginning inventory units Ending inventory units Pre

Question

32. Consider the following: Beginning inventory units Ending inventory units Predetermined fixed overhead rate Absorption costing income 5,000 1,000 $4 $30,000 Use the "shortcu?" method of reconciling the difference in reported income under absorption costing and variable costing to determine the variable costing income. a. $14,000 b. $46,000 c. $30,000. d. $24,000. d nate per unit $4). The var abeorption e period, ' Difference in fixed overhead expensed under absorption and variable costing(Change in inventory units) x (Predetermined fixed-overhead rate per unit). The difference in fixed overhead expensed under absorption and variable costing is $16,000 (= 4,000 x $4). The variable costing income is $46,000 (= $30,000 $16,000). There was a decrease in inventory, and under absorption costing the fixed costs associated with the beginning inventory would be expensed in the current time period, resulting in absorption costing income being less than variable costing income

Explanation / Answer

The correct option is (b) i.e. $46,000.

In the question, we have been said to calculate variable costing income and we know that absorption costing income does not include fixed overhead. However, variable costing income do includes fixed overhead.

Hence, variable costing income would be $(30,000+16,000) = $46,000 and $16,000 is the difference between both the approach $(46,000-30,000) = $16,000

Related Questions

Navigate

• Browse (All)
• Browse 3
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.