Answer:
The net income under variable costing would $55,000
Explanation:
Under absorption costing, the fixed for closing inventory has been deferred ,hence in order to calculate net income variable costing method,the deferred fixed cost in respect of closing inventory must be deducted from profit ascertained under absorption costing as below
Profit using variable costing=profit under absorption costing minus deferred fixed cost
deferred fixed cost=(20000-18000)*$100000/$20
=$10,000
profit under variable costing =$65,000-$10000
=$55,000
Answer:
Income under variable=$55,000
Option D is correct ( $55,000.)
Explanation:
Lets first calculate the total cost per unit:
Total cost per unit=[tex]\frac{manufacturing\ overhead}{actual\ production\ units} +Standard\ variable\ manufacturing\ cost\ per\ unit[/tex]
Total Cost per unit=[tex]\frac{\$100,000}{20,000}+ \$20[/tex]
Total cost per unit=$25
Sales Revenue=Total cost per unit*units sold+Income using absorption costing
Sales Revenue=$25*18,000+$65,000
Sales Revenue=$515,000
Cost of goods sold= Standard variable cost per unit*units sold
Cost of goods sold=$20*18,000
Cost of goods sold=$360,000
Income under variable=Sales Revenue-Cost of goods sold-fixed manufacturing overhead
Income under variable=$515,000-$360,000-$100,000
Income under variable=$55,000
Option D is correct ( $55,000.)
