Variable and Absorption Costing Grant Company sells its product for $58 per unit
ID: 342014 • Letter: V
Question
Variable and Absorption Costing
Grant Company sells its product for $58 per unit. Variable manufacturing costs per unit are $37, and fixed manufacturing costs at the normal operating level of 18,000 units are $90,000. Variable selling expenses are $6 per unit sold. Fixed administrative expenses total $155,000. Grant had 7,000 units at a per-unit cost of $42 in beginning inventory in 2016. During 2016, the company produced 18,000 units and sold 20,000. Would net income for Grant Company in 2016 be higher if calculated using variable costing or using absorption costing?
Calculate reported income using each method.
Do not use negative signs with any answers.
$Answer
Absorption Costing Income Statement Sales $Answer Cost of Goods Sold: Beginning Inventory Answer Variable Costs Answer Fixed Costs Answer Less: Ending Inventory Answer Cost of Goods Sold Answer AnswerContribution marginGross profitLess: Ending inventoryManufacturing costSelling expenseVariable selling expense Answer AnswerContribution marginGross profitLess: Ending inventoryManufacturing costSelling expenseVariable selling expense Answer Administrative expense Answer Net Income $Answer CLICK HERE TO REVIEW LEARNING OBJECTIVES QUESTION 2 Not complete Points out of 3.00 Fleg question Variable and Absorption Costing Grant Company sells its product for $58 per unit. Variable manufacturing costs per unit are $37, and fixed manufacturing costs at the normal operating level of 18,000 units are 90,000. Variable selling expenses are $6 per unit sold. Fixed administrative expenses total $1 55,000. Grant had 7,000 units at a per-unit cost of $42 in beginning inventory in 2016. During 2016, the company produced 18,000 units and sold 20,000. Would net income for Grant Company in 2016 be higher if calculated using variable costing or using absorption costing? Calculate reported income using each method. Do not use negative signs with any answers. Absorption Costing Income Statement Sales Cost of Gaads Sold: Beginning Inventory Variable Costs Fixed Costs Less: Ending Inventory Cost of Goods Sold Administrative expense Net Income Variable Costing Income Statement Sales Cost of Goods Sold: Beginning Inventory Variable Costs Variable cost of goods sald Fixed cos Administrative Expense Total Fioxed Cost Net Income CheckExplanation / Answer
Absorption Costing Income Statement Sales 1160000 Cost of Goods Sold: Beginning Inventory 294000 Variable Costs 666000 Fixed Costs 90000 Less: Ending Inventory 210000 Cost of Goods Sold 840000 Gross profit 320000 Selling expense 120000 or variable selling expense Administrative expense 155000 Net Income 45000 Variable Costing Income Statement Sales 1160000 Cost of Goods Sold: Beginning Inventory 259000 Variable Costs 666000 Less: Ending inventory 185000 Variable cost of goods sold 740000 Variable selling expense 120000 Contribution margin 300000 Fixed costs: Manufacturing cost 90000 Administrative Expense 155000 Total Fixed Cost 245000 Net Income 55000
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