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Absorption Costing & Variable Costing

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PROBLEM III

Third, Inc. which makes a single product had the following information for 2010.

Selling Price $8.00 per unit
Denominator (Planned production) 100,000 units
Production 90,000 units
Sales 80,000 units
Beginning Inventory -0-
Fixed Manufacturing Costs $70,000
Fixed Operating Expenses $20,000
Variable costs and expenses per unit $5.00
Variable Operating Expenses $1.00

The denominator level of activity is 100,000 units.

REQUIRED: SHOW WORK ON WORK SHEET PROVIDED ON PAGE 4.

1. Absorption Gross Profit for 2010. ______________________

2. Absorption Net Income for 2010. ____________________

3. Variable Total Contribution for 2010. _____________________

4. Variable Net Income for 2010. _____________________

5. One factor that causes answers 2 and 4 to differ.

Cause __________________________________________

Amount______________________

 
WORKSHEET FOR PROBLEM III

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Solution Summary

The solution computes Absorption Gross Profit, Absorption Net Income, Variable Total Contribution & Variable Net Income.

Solution Preview

Check the attached sheet.

The answers are herein under...

1. Absorption Gross Profit for 2010 = $177,600
2. Absorption Net ...

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