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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.