Vsion Tester, Inc anufacer of optical glass, began operations on Fenary 1 of he

Question

Vsion Tester, Inc anufacer of optical glass, began operations on Fenary 1 of he cument year Duingis time, the company produced 900,000 unts and sold 800,000uns atsaes price of $12 p wil esceed net income under absorption costing by $50 000 wil exceed net income under variable costing by $50.000 under vanabie O Nel income under absorpton conting O Net inoome wil be Be sarme under both absorption and vanable cng O Net income under varable costing wi exceed net income under absorption costng ty 169 000 Net ncome under absorton costing wil enceed net ncome under vanable cestng by 560.000

Explanation / Answer

“Net income under absorption costing system will exceed net income under variable costing by $50000”

Because the only difference between net income under absorption costing system and net income under variable costing system will happen because of Fixed Manufacturing Overhead. It will be treated as Product cost under absorption costing and period cost under variable costing.in absorption costing the fixed manufacturing overhead will be $400000 (800000 units * 0.50 per Unit) but in Variable costing the whole of $450000 will be considered in income statement. Thus, Net income under absorption costing system will exceed net income under variable costing by $50000

Related Questions

Navigate

• Browse (All)
• Browse V
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.