Analyzing Income under Absorption and Variable Costing Variable manufacturing co

Question

Analyzing Income under Absorption and Variable Costing Variable manufacturing costs are $91 per unit, and fixed manufacturing costs are $123,500. Sales are estimated to be 5,100 units. If an amount is zero, enter "0". Do not round interim calculations. Round final answer to nearest whole dollar. a. How much would absorption costing income from operations differ between a plan to produce 5,100 units and a plan to produce 6,500 units? $ b. How much would variable costing income from operations differ between the two production plans? $

Explanation / Answer

Particulars Absorption costing (working) Absorption costing Variable costing No Of units 5100 6500 5100 6500 5100 6500 Variable Cost @ 91 =91*5100 =91*6500 -464100 -591500 -464100 -591500 Fixed Manufacturing cost = no of units sold*123500/5100 = no of units sold*123500/6500 -123500 -123500 -587600 -715000

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