Net income under variable and absorption costing methods
Not what you're looking for?
Dayton Lighting Company had net income for the first 10 months of the current year of $200,000. One hundred thousand units were manufactured during this period (the same as the planned production), and 100,000 units were sold. Fixed manufacturing overhead was $2,000,000 over the 10-month period (i.e., $200,000 per month). There are no selling and administrative expenses for Dayton Lighting Company. Both variable and fixed costs are expected to continue at the same rates for the balance of the year (i.e., fixed costs at $200,000 per month and variable costs at the same variable cost per unit). There were 10,000 units in inventory on October 31. Twenty thousand units are to be produced and 19,000 units are to be sold in total over the last two months of the current year. Assume the unit variable cost is the same in the current year as in the previous year. (Hint: You cannot calculate revenue or cost of goods sold; you must work directly with contribution margin or gross margin
If operations proceed as described, what will net income for the year in total be under (a) variable costing and (b) absorption costing? (Ignore income taxes)
Net Income
(a) Variable costing $
(b) absorption costing $
Purchase this Solution
Solution Summary
Net income under variable and adsorption costing methods are examined.
Solution Preview
Solution is provided in a separate excel file attached. It contains following parts with full working and ...
Purchase this Solution
Free BrainMass Quizzes
Accounting: Statement of Cash flows
This quiz tests your knowledge of the components of the statements of cash flows and the methods used to determine cash flows.
Basics of corporate finance
These questions will test you on your knowledge of finance.
Writing Business Plans
This quiz will test your understanding of how to write good business plans, the usual components of a good plan, purposes, terms, and writing style tips.
Organizational Behavior (OB)
The organizational behavior (OB) quiz will help you better understand organizational behavior through the lens of managers including workforce diversity.
Understanding Management
This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.