Question

1. Alvin Inc. planned and actually manufactured 200,000 units of its single product in 2019, its first year of operations. Variable manufacturing costs were $30 per unit of product produced. Planned and actual fixed manufacturing costs were $600,000, and fixed marketing and administrative costs totaled $400,000 in 2019. Alvin sold 120,000 units of product in 2019 at a selling price of $40 per unit.

What is Alvin's 2019 operating income using variable costing?

What is Alvin's 2019 operating income using absorption costing?

Answer 1

vaariable costing year 2019 30 30 variable mfg unit product cost income statement variable costing vaariable costing year 2019 4800000 3600000 1200000 10,00,000 2,00,000 income statement variable costing sales variable cost of goods sold contribution margin fixed costs (fixed selling+mfg overhead) net operating profit

absorption costing year 2019 30 3 variable mfg cost fixed factory unit product cost absorption costing year 2019 48,00,0000 3960000 8,40,000 400000 income statement absorption costing sales cost of goods sold gross gross margin selling and administration costs net operating income 4,40,000

Reconciliation schedule 2019 net operating income variable costing 2,00,000 add:fixed manufacturing overhead cost differed in ending inventory (200000-120000)*3 net operating income absorption costing 240000 4,40,000