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of the last three years. The units in year 1 beginning inventory were based on production of 500 units. Year 1 2 3 Beginning Inventory 40 0 30 Production 100 130 160 Sales 140 100 160 Ending inventory 0 30 30 Your are required to calculate the difference between absorption costing and variable costing operating income for each year. Indicate which costing system has the highest income each year. Assume the LIFO method is used in year three. Year 1- Variable costing operating income is higher ✓ by $

of the last three years. The units in year 1 beginning inventory were based on production of 500 units. Year 1 2 3 Beginning Inventory 40 0 30 Production 100 130 160 Sales 140 100 160 Ending inventory 0 30 30 Your are required to calculate the difference between absorption costing and variable costing operating income for each year. Indicate which costing system has the highest income each year. Assume the LIFO method is used in year three. Year 1- Variable costing operating income is higher ✓ by $

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter18: Pricing And Profitability Analysis
Section: Chapter Questions
Problem 3CE: Pattison Products, Inc., began operations in October and manufactured 40,000 units during the month...
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The following table shows Jackson Company's inventory balances, in units, for years 1, 2 and 3. Total fixed costs were $20,000 for each of the last three years. The units in year 1 beginning inventory were based on production of 500 units. Year 1 2 3 Beginning Inventory 40 0 30 Production 100 130 160 Sales 140 100 160 Ending inventory 0 30 30 Your are required to calculate the difference between absorption costing and variable costing operating income for each year. Indicate which costing system has the highest income each year. Assume the LIFO method is used in year three. Year 1- Variable costing operating income is higher by $ Year 2- Absorption operating income is higher by $ Year 3- Variable or Absorption costing operating income will be higher v
Transcribed Image Text:The following table shows Jackson Company's inventory balances, in units, for years 1, 2 and 3. Total fixed costs were $20,000 for each of the last three years. The units in year 1 beginning inventory were based on production of 500 units. Year 1 2 3 Beginning Inventory 40 0 30 Production 100 130 160 Sales 140 100 160 Ending inventory 0 30 30 Your are required to calculate the difference between absorption costing and variable costing operating income for each year. Indicate which costing system has the highest income each year. Assume the LIFO method is used in year three. Year 1- Variable costing operating income is higher by $ Year 2- Absorption operating income is higher by $ Year 3- Variable or Absorption costing operating income will be higher v
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