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# Under adsorption and under variable costing

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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.

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