Analyzing Income under Absorption and Variable CostingVariable manufacturing costs are $126 per unit, and fixed manufacturing costs are $157,500. Sales are estimated to be 10,000 units.If an amount is zero, enter "O"a. How much would absorption costing operating income differ between a plan to produce 10,000 units and a plan to produce 15,000 units?141.75 Xb. How much would variable costing operating income differ between the two production plans?136.5 X

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Asked Nov 11, 2019
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Analyzing Income under Absorption and Variable Costing
Variable manufacturing costs are $126 per unit, and fixed manufacturing costs are $157,500. Sales are estimated to be 10,000 units.
If an amount is zero, enter "O"
a. How much would absorption costing operating income differ between a plan to produce 10,000 units and a plan to produce 15,000 units?
141.75 X
b. How much would variable costing operating income differ between the two production plans?
136.5 X
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Analyzing Income under Absorption and Variable Costing Variable manufacturing costs are $126 per unit, and fixed manufacturing costs are $157,500. Sales are estimated to be 10,000 units. If an amount is zero, enter "O" a. How much would absorption costing operating income differ between a plan to produce 10,000 units and a plan to produce 15,000 units? 141.75 X b. How much would variable costing operating income differ between the two production plans? 136.5 X

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Expert Answer

Step 1

a. Compute difference in absorption costing operating income for plan to produce 10,000 units and 15,000 units as shown below:

 

The operating inc...

Fixed manufacturing cost
Highest production
Difference in operating income
(Difference in prođiction
for produce under absorpti on costing
$157,500
(15,000-10,00)
15,000
= S52,500
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Fixed manufacturing cost Highest production Difference in operating income (Difference in prođiction for produce under absorpti on costing $157,500 (15,000-10,00) 15,000 = S52,500

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