Pane Inc. manufactures hair brushes that sell at wholesale for $2.60 per unit. B

Question

Pane Inc. manufactures hair brushes that sell at wholesale for $2.60 per unit. Budgeted production in both 2024 and 2025 was 2,500 units. There was no beginning inventory in 2024. The following data summarized the 2024 and 2025 operations:

Absorption costing operating income for 2024 is calculated to be ________?

Variable costing operating income for 2024 is calculated to be ________?

aT Units sod Units prodnced Costs 2024 2,500 3,000 2021 3,000 2,500 $0.10 0.10 $020020 Variable faory overhead per t$030$ 030 $1200.00 $1200.00 $090$090 $ 65000$ 650.00 Diecd materials per nit Dieet abor per mit Fixed factory overhead Variable seng per un't sold Fxed admistive

Explanation / Answer

1

Absorption costing operating income =unit sold [price -unit cost ]- variable selling -fixed selling

           = 2500[2.6-1] - [2500*.90 ] -650

            = 4000-2250 -650

           = 1100

Variable costing operating income = unit sold [price- unit cost - variable selling ] -fixed overhead -fixed administrative

       = 2500 [2.6 - .60 - .90 ] - 1200-650

      = 2750-1200-650

      = 900

Variable costing Absorption costing Direct material .10 .10 Direct labor .20 .20 variable overhead .30 .30 Fixed factory .40     [1200/3000] unit cost .60

1

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