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Variable (Direct) Costing
Variable (Direct) Costing
4. What would be Kern’s finished goods inventory cost at December 31,20cy under variable costing?
Solution:
5. Which Costing method, absorption or variable, would show higher operating income by what
amount?
Solution:
Solution:
7. Under the absorption costing method, Peter’s operating income for 20CY, would be?
Solution:
Peter Company
Income Statement
(Absorption Costing)
Sales 1,400,000
Cost of Sales:
Production Costs:
Variable 630,000
Fixed 315,000
Total Production Costs 945,000
Inventory, end 135,000 810,000
(945,0000/70,000) *10000
Gross Margin 590,000
Selling and Administrative
Expenses:
Variable Selling and 98,000
Administrative
Fixed Selling and 140,000 238,000
Administrative
Net Income 352,000
C. 352,000