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    Under adsorption and under variable costing

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    Please help with the following problem.

    Ace Manufacturing Company produced 12,000 units and sold 10,000 units during 2010. The prime costs required for one unit of product totaled $10, along with variable factory overhead of $2. Total fixed factory overhead during 2010 was $48,000. Ace's sales expenses were $5 per unit, with annual fixed sales and administrative expenses of $100,000. The sales price per unit during 2010 was $30.

    What is the net income according to absorption costing?
    What is the net income according to variable costing?
    Explain the difference in net income between absorption and variable costing?

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    Questions: What is the net income according to absorption costing? What is the net income according to variable costing? Explain the difference in net income between absorption and variable costing?

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    Solution Summary

    This solution explains the different between net income under absorption costing and under variable costing. The answer is given in Excel.

    $2.19

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