Grainger Company produces only one product and sells that product for $90 per unit. Cost information for the product is as follows: Direct Material $15 per Unit Direct Labor $26 per Unit Variable Overhead $4 per Unit Fixed Overhead $34,000 Selling expenses are $3 per unit and are all variable. Administrative expenses of $15,000 are all fixed. Grainger produced 5,000 units; sold 4,000; and had no beginning inventory. A. Compute net income under i. Absorption Costing $fill in the blank 1 ii. Variable Costing $fill in the blank 2 B. Which costing method provide higher net income? By how
Grainger Company produces only one product and sells that product for $90 per unit. Cost information for the product is as follows: Direct Material $15 per Unit Direct Labor $26 per Unit Variable Overhead $4 per Unit Fixed Overhead $34,000 Selling expenses are $3 per unit and are all variable. Administrative expenses of $15,000 are all fixed. Grainger produced 5,000 units; sold 4,000; and had no beginning inventory. A. Compute net income under i. Absorption Costing $fill in the blank 1 ii. Variable Costing $fill in the blank 2 B. Which costing method provide higher net income? By how
Chapter6: Activity-based, Variable, And Absorption Costing
Section: Chapter Questions
Problem 13PA: Grainger Company produces only one product and sells that product for $100 per unit. Cost...
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Grainger Company produces only one product and sells that product for $90 per unit. Cost information for the product is as follows:
| Direct Material | $15 | per Unit |
| Direct Labor | $26 | per Unit |
| Variable Overhead | $4 | per Unit |
| Fixed Overhead | $34,000 |
Selling expenses are $3 per unit and are all variable. Administrative expenses of $15,000 are all fixed. Grainger produced 5,000 units; sold 4,000; and had no beginning inventory.
A. Compute net income under
i. Absorption Costing $fill in the blank 1
ii. Variable Costing $fill in the blank 2
B. Which costing method provide higher net income? By how much?
The
method provided more net income by $fill in the blank 4 .
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