Variable and absorption costingPorta Light manufactures a high-quality LED flashlight for home/office use. Data pertaining to the company’s operations for the year are as follows:Production for the year99,000unitsSales for the year (sales price per unit, $8)107,250unitsBeginning inventory19,250unitsCosts to produce one unit (This year and prior year): Direct material$3.60 Direct labor1.00 Variable overhead0.60 Fixed overhead0.40 Selling and administrative costs: Variable (per unit sold)$0.40 Fixed (per year)$330,000 The FOH rate is based on units of production based on an expected production capacity of 220,000 units per year.d. How much total expense is charged against revenues for the year(1) under absorption costing? $Answer(2) under variable costing? $Answere. Is income higher under absorption or variable costing? By what amount?answer by $answer

The question is based on the concept of Cost Accounting.

Answered: Porta Light manufactures a high-quality…

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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Variable and absorption costing
Porta Light manufactures a high-quality LED flashlight for home/office use. Data pertaining to the company’s operations for the year are as follows:

Production for the year	99,000	units
Sales for the year (sales price per unit, $8)	107,250	units
Beginning inventory	19,250	units
Costs to produce one unit (This year and prior year):
Direct material	$3.60
Direct labor	1.00
Variable overhead	0.60
Fixed overhead	0.40
Selling and administrative costs:
Variable (per unit sold)	$0.40
Fixed (per year)	$330,000

The FOH rate is based on units of production based on an expected production capacity of 220,000 units per year.

d. How much total expense is charged against revenues for the year
(1) under absorption costing? $Answer
(2) under variable costing? $Answer

e. Is income higher under absorption or variable costing? By what amount?
answer by $answer

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