In the month just ended Nelson Industries produced 41993 units and sold 35175 units. Manufacturing costs...
In the month just ended Nelson Industries produced 41993 units and sold 35175 units. Manufacturing costs are stable from month to month. The fixed overhead rate was $8 per unit. Nelson uses absorption costing. If Nelson changed to variable costing, the difference in net income would have been:
Select one:
a. $335944
b. $-54544
c. $0
d. $617344
Homework Answers
Correct answer-----b. $-54544
.
The difference between Variable costing and absorption costing income is equal to Fixed manufacturing overhead applied to ending inventory in Absorption costing.
| Units produced | 41993 |
| Units sold | 35175 |
| Units in ending inventory | 6818 |
| Fixed manufacturing overhead per unit | $ 8.00 |
| Fixed manufacturing overhead applied to ending inventory in absorption costing | $ 54,544.00 |
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