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Absorption Costing Chandler Company sells its product for $107 per unit. Variable manufacturing costs per unit are $48, and fixed manufacturing costs at the normal operating level of 12,000 units are $240,000. Variable selling expenses are $19 per unit sold. Fixed administrative expenses total $104,000. Chandler had no beginning inventory in 2016. During 2016, the company produced12,000 units and sold 9,000. Would net income for Chandler 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 963,000 Cost of Goods Sold: Beginning inventory Variable Costs 576.000 Fixed Costs 240.000 Less: Ending inventory Cost of Goods Sold Gross profi. Contribution margin Administrative expense 104.000 Net income Variable Costing Income Statement Sales 963.000 Cost of Goods Sold: Beginning inventory Variable Costs Variable cost of goods sold Fixed costs: Administrative Expense Total Fixed Cost

Absorption Costing Chandler Company sells its product for $107 per unit. Variable manufacturing costs per unit are $48, and fixed manufacturing costs at the normal operating level of 12,000 units are $240,000. Variable selling expenses are $19 per unit sold. Fixed administrative expenses total $104,000. Chandler had no beginning inventory in 2016. During 2016, the company produced12,000 units and sold 9,000. Would net income for Chandler 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 963,000 Cost of Goods Sold: Beginning inventory Variable Costs 576.000 Fixed Costs 240.000 Less: Ending inventory Cost of Goods Sold Gross profi. Contribution margin Administrative expense 104.000 Net income Variable Costing Income Statement Sales 963.000 Cost of Goods Sold: Beginning inventory Variable Costs Variable cost of goods sold Fixed costs: Administrative Expense Total Fixed Cost

Managerial Accounting: The Cornerstone of Business Decision-Making
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter3: Cost Behavior And Cost Forecasting
Section: Chapter Questions
Problem 54E: Income Statements under Absorption and Variable Costing In the coming year, Kalling Company expects...
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Would net income for Chandler Compnay in 2016 be higher if calculated using variable costing or using absorption costing?

Variable and Absorption Costing Chandler Company sells its product for $107 per unit. Variable manufacturing costs per unit are $48, and fixed manufacturing costs at the normal operating level of 12,000 units are $240,000. Variable selling expenses are $19 per unit sold. Fixed administrative expenses total $104,000. Chandler had no beginning inventory in 2016. During 2016, the company produced 12,000 units and sold 9,000. Would net income for Chandler 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 24 963,000 Cost of Goods Sold: Beginning Inventory 0. Variable Costs 576,000 Fixed Costs 240,000 Less: Ending Inventory 0. Cost of Goods Sold Gross profit 0. Contribution margin 0. Administrative expense 104,000 Net Income Variable Costing Income Statement Sales 24 963,000 Cost of Goods Sold: Beginning Inventory Variable Costs Variable cost of goods sold Fixed costs: Administrative Expense 0. 0. Total Fixed Cost Net Income %24
Transcribed Image Text:Variable and Absorption Costing Chandler Company sells its product for $107 per unit. Variable manufacturing costs per unit are $48, and fixed manufacturing costs at the normal operating level of 12,000 units are $240,000. Variable selling expenses are $19 per unit sold. Fixed administrative expenses total $104,000. Chandler had no beginning inventory in 2016. During 2016, the company produced 12,000 units and sold 9,000. Would net income for Chandler 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 24 963,000 Cost of Goods Sold: Beginning Inventory 0. Variable Costs 576,000 Fixed Costs 240,000 Less: Ending Inventory 0. Cost of Goods Sold Gross profit 0. Contribution margin 0. Administrative expense 104,000 Net Income Variable Costing Income Statement Sales 24 963,000 Cost of Goods Sold: Beginning Inventory Variable Costs Variable cost of goods sold Fixed costs: Administrative Expense 0. 0. Total Fixed Cost Net Income %24
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