Question

Which of the following situations would cause variable-costing income to be lower than absorption-costing income? Group...

Which of the following situations would cause variable-costing income to be lower than absorption-costing income?
Group of answer choices

Units sold equalled 39,000 and units produced equalled 42,000.

Sales prices decreased by $7 per unit during the accounting period.

Units sold equalled 55,000 and units produced equalled 49,000.

Units sold and units produced were both 42,000.

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1
If the unit produced is more than the unit sold in that case variable Costing income will be lower than absorption costing income because under variable costing system fixed manuacturing expense will be treated as period cost resulting in lower income as compare to absorption costing system where fixed manufacturing overhead will be treated as product cost & portionate fixed manufatcuring overhead will included in the cost on unsold inventories resulting in more profit.
Correct answer is option 1 ( i.e. Unit sold equalled 39,000 and units produced equalled 42,000 ).
0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
If units produced are more than units sold, Group of answer choices operating income is the...
If units produced are more than units sold, Group of answer choices operating income is the same under both absorption costing and variable costing operating income is higher under absorption costing compared to variable costing operating income is higher under variable costing compared to absorption costing
Income Statements under Absorption Costing and Variable Costing Joplin Industries Inc. manufactures and sells high-quality sporting...
Income Statements under Absorption Costing and Variable Costing Joplin Industries Inc. manufactures and sells high-quality sporting goods equipment under its highly recognizable J-Sports logo. The company began operations on May 1 and operated at 100% of capacity (42,900 units) during the first month, creating an ending inventory of 3,900 units. During June, the company produced 39,000 garments during the month but sold 42,900 units at $85 per unit. The June manufacturing costs and selling and administrative expenses were as follows:...
Problem 06-1A Variable costing income statement and conversion to absorption costing income (two consecutive years) LO...
Problem 06-1A Variable costing income statement and conversion to absorption costing income (two consecutive years) LO P2, P3 [The following information applies to the questions displayed below.] Dowell Company produces a single product. Its income statements under absorption costing for its first two years of operation follow. 2018 2019 Sales ($48 per unit) $ 1,152,000 $ 2,112,000 Cost of goods sold ($33 per unit) 792,000 1,452,000 Gross margin 360,000 660,000 Selling and administrative expenses 282,000 317,000 Net income $ 78,000...
Problem 06-1A Variable costing income statement and conversion to absorption costing income (two consecutive years) LO...
Problem 06-1A Variable costing income statement and conversion to absorption costing income (two consecutive years) LO P2, P3 Dowell Company produces a single product. Its income statements under absorption costing for its first two years of operation follow. 2018 2019 Sales ($48 per unit) $ 1,152,000 $ 2,112,000 Cost of goods sold ($33 per unit) 792,000 1,452,000 Gross margin 360,000 660,000 Selling and administrative expenses 282,000 317,000 Net income $ 78,000 $ 343,000 Additional Information Sales and production data for...
Exercise 19-3 Income reporting under absorption costing and variable costing LO P2 Sims Company, a manufacturer...
Exercise 19-3 Income reporting under absorption costing and variable costing LO P2 Sims Company, a manufacturer of tablet computers, began operations on January 1, 2017. Its cost and sales information for this year follows. Manufacturing costs Direct materials $ 40 per unit Direct labor $ 60 per unit Overhead costs for the year Variable overhead $ 3,000,000 Fixed overhead $ 7,000,000 Selling and administrative costs for the year Variable $ 770,000 Fixed $ 4,250,000 Production and sales for the year...
Exercise 6-3 Income reporting under absorption costing and variable costing LO P2 Sims Company, a manufacturer...
Exercise 6-3 Income reporting under absorption costing and variable costing LO P2 Sims Company, a manufacturer of tablet computers, began operations on January 1, 2017. Its cost and sales information for this year follows. Manufacturing costs Direct materials $ 40 per unit Direct labor $ 60 per unit Overhead costs for the year Variable overhead $ 3,000,000 Fixed overhead $ 7,000,000 Selling and administrative costs for the year Variable $ 750,000 Fixed $ 4,750,000 Production and sales for the year...
M&H’s unit production cost under variable costing is $24, and $31 under absorption costing. Net income...
M&H’s unit production cost under variable costing is $24, and $31 under absorption costing. Net income under variable costing was $237000 and $178900 under absorption costing last year. Production equalled 70000 units. How many units did M&H sell? 78300 61700 77000 63000
Whitman Company has just completed its first year of operations. The company’s absorption costing income statement...
Whitman Company has just completed its first year of operations. The company’s absorption costing income statement for the year follows: Whitman Company Income Statement Sales (39,000 units × $42.60 per unit) $ 1,661,400 Cost of goods sold (39,000 units × $21 per unit) 819,000 Gross margin 842,400 Selling and administrative expenses 409,500 Net operating income $ 432,900 The company’s selling and administrative expenses consist of $292,500 per year in fixed expenses and $3 per unit sold in variable expenses. The...
Problem 06-2A Variable costing income statement and conversion to absorption costing income LO P2, P3 Trez...
Problem 06-2A Variable costing income statement and conversion to absorption costing income LO P2, P3 Trez Company began operations this year. During this first year, the company produced 100,000 units and sold 80,000 units. The absorption costing income statement for this year follows. Sales (80,000 units × $45 per unit) $ 3,600,000 Cost of goods sold Beginning inventory $ 0 Cost of goods manufactured (100,000 units × $25 per unit) 2,500,000 Cost of goods available for sale 2,500,000 Ending inventory...
Income Statements under Absorption and Variable Costing Patagucci Inc. manufactures and sells athletic equipment. The company...
Income Statements under Absorption and Variable Costing Patagucci Inc. manufactures and sells athletic equipment. The company began operations on August 1, 2016, and operated at 100% of capacity (38,500 units) during the first month, creating an ending inventory of 3,500 units. During September, the company produced 35,000 garments but sold 38,500 units at $80 per unit. The September manufacturing costs and selling and administrative expenses were as follows: Number of Units Unit Cost Total Cost Manufacturing costs in September beginning...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT