The following information applies to the questions displayed below. income state

Question

The following information applies to the questions displayed below. income statemenns under absorption costing for its first two years of operation follow. 2015 Sales ($48 per unit Cost of goods soid ($33 per unit) 1200,000 $2,160.000 825,0001,485,000 Gross margin Seling and administrative expenses 375,000 675,000 296.250 341250 Net income $ 78,750$ 333,750o AdditionW Information a. Sales and production data for these first two years follow Units produced Units sold 35.000 35.000 25.000 45,000 b. Variable cost per unit and total fxed costs are unchanged during 2014 and 2015. The company's $33 per unit product cost consists of the following s 5 Direct labor Variable overhead Foed overhead 350.00035 000 unts) 10 10 Total product cost per unit $ 33 c Seling and administrative expenses consist of the following Variable selling and administrative expenses ($2.25 per unit $ 56.250 Fixed seling and administrative expenses 101260 240,000 240.000 Total selling and administrative expenses $ 296.250 341250

Explanation / Answer

2) What is differenece between absorption costing operating income and variable costing net operating income:

2014 2015 Variable costing income (loss) (21250) 433750 Add: Fixed overhead in ending inventory (10000*10) 100000 Less: Fixed overhead in beginning inventory (10000*10) (100000) Absorption costing income (loss) 78750 333750

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