Variable and Absorption Costing Grant Company sells its product for $50 per unit. Variable manu- facturing costs per unit are $30, and fixed manufacturing costs at the normal operating level of 15,000 units are $90,000. Variable selling expenses are $4 per unit sold. Fixed administrative expenses total $155,000. Grant had 7,000 units at a per-unit cost of $35 in beginning inventory. During the year, the company produced 15,000 units and sold 20,000. Would net income for Grant Company be higher if calculated using variable costing or using absorption costing? Calculate reported income using each method.
Variable and Absorption Costing Grant Company sells its product for $50 per unit. Variable manu- facturing costs per unit are $30, and fixed manufacturing costs at the normal operating level of 15,000 units are $90,000. Variable selling expenses are $4 per unit sold. Fixed administrative expenses total $155,000. Grant had 7,000 units at a per-unit cost of $35 in beginning inventory. During the year, the company produced 15,000 units and sold 20,000. Would net income for Grant Company be higher if calculated using variable costing or using absorption costing? Calculate reported income using each method.
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter2: Basic Cost Management Concepts
Section: Chapter Questions
Problem 24E: Last year, Orsen Company produced 25,000 juicers and sold 26,500 juicers for 60 each. The actual...
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Transcribed Image Text:Variable and Absorption Costing Grant Company sells its product for $50 per unit. Variable manu-
facturing costs per unit are $30, and fixed manufacturing costs at the normal operating level of 15,000
units are $90,000. Variable selling expenses are $4 per unit sold. Fixed administrative expenses total
$155,000. Grant had 7,000 units at a per-unit cost of $35 in beginning inventory. During the year, the
company produced 15,000 units and sold 20,000. Would net income for Grant Company be higher if
calculated using variable costing or using absorption costing? Calculate reported income using each
method.
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