C. absorption costing operating income exceeds variable costing operating income

Question

C. absorption costing operating income exceeds variable costing operating income Garfield Company has the following information for the current year: Beginning fixed manufacturing overhead in inventory $250,000 Fixed manufacturing overhead in production 850,000 Ending fixed manufacturing overhead in inventory 70,000 Beginning variable manufacturing overhead in inventory $40,000 Variable manufacturing overhead in production 100,000 nding variable manufacturing overhead in inventory 30,000 Vhat is the difference between operating incomes under absorption costing and variable costing? 80,000

Explanation / Answer

Calculation of the difference between operating incomes under absorption costing and variable costing

The difference between operating incomes under absorption costing and variable costing

= Beginning fixed manufacturing overhead in inventory - Ending fixed manufacturing overhead in inventory

= $250,000 - $70,000

= $180,000

Therefore, the difference between operating incomes under absorption costing and variable costing is $180,000.

Explanation:

The difference between operating incomes under absorption costing and variable costing arises due to Fixed manufacturing overhead costs deferred in (released from) inventory under absorption costing

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