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Net Income for Variable and Absorption Costing

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Soccer nets for commercial use sell for $200.00 each. Selected data for the company's operations for the last year follow:

Units in beginning inventory 0
Units produced 500
Units sold 300
Units ending inventory 200
Variable costs per unit
Direct materials $75
Labor 30
Variable manufacture overhead 10
Selling and administrative 5
Fixed costs
Fixed manufacturing overhead $2000
Selling and administrative $100

A. Assume that the company uses variable costing, compute the net operating income. (Please show all work).
B. Assume that the company uses the absorption costing, compute the net operating income. (Show all work).

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Solution Summary

The solution determines the net income for variable and absorption costing.

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