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In 2018, Joshua Company's income under absorption costing was $15,000 higher than its income under variable...

In 2018, Joshua Company's income under absorption costing was $15,000 higher than its income under variable costing. During the year, the company produced 20,000 units. If total variable production costs were $80,000 and fixed manufacturing overhead was $40,000, how many units did the company sell in 2018?

This is all the information given. Please show work so I can learn. Thank you.

 

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Homework Answers

Answer #1
Number of Units Sold           12,500.00
Fixed Manufactring Cost           40,000.00
Production Units           20,000.00
Fixed Manufactring Cost per Unit                      2.00
Excess Income under absorption costing           15,000.00
Total Fixed Cost           40,000.00
Fixed Cost Allocated in Current Year           25,000.00
Fixed Manufactring Cost per Unit                      2.00
Number of Units Sold           12,500.00

Under Absorption, the Fixed Cost is allocated to unit sold and closing stock. So if the profit under absorption is more by 15,000 that means the cost of Fixed cost allocated to the closing stock is 15,000.


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