Question 2 (of 8) 2. 125 points value Quick Study 19-15 Converting variable cost

Question

Question 2 (of 8) 2. 125 points value Quick Study 19-15 Converting variable costing income to absorption costing income LO P3 E-Com had net income of $124,000 under variable costing. Beginning and ending inventories were 1,140 units and 4,300 units, respectively. Fixed overhead cost was $1.90 per unit for both the beginning and ending inventory. What is net income under absorption costing? When the number of units produced exceeds the number of units sold, net income under absorption costing will be The difference in income is equal to: Net Income under variable costing Net Income under absorption costing References eBook & Resources 0 Type here to search

Explanation / Answer

SOLUTION: (a) When the number of units produced exceeds the number of units sold, net income under absorption costing will be greater than the net income under variable costing.

(b) The difference in income is = 130004-124000

= $6,004

(c)

Particulars Details Amount ($) Net income under variable costing 124,000 Add: Ending inventory 4,300units × $1.90 8,170 Less: Beginning inventory 1,140 units × $1.90 2,166 Net income under absorption costing 130,004

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