Answer:
b. $110,000
Explanation:
Note: Similar Question is attached as picture below
Given, Inventory Increased by 5,000 Units
. Units Sold decreases by 5,000 Units will equals to = 20,000 - 5,000 Units = 15,000 Units
Particulars Amount
Sales $3,450,000
(15,000 Units *$230)
Less: Variable Cost $1,380,000
(15,000 Units * $92)
Less: Variable Selling Expenses $81,000
Less: Fixed General and Administrative Costs $102,000
Income Under Absorption costing $1,887,000
Particulars Amount
Sales $3,450,000
(15,000 Units *$230)
Less: variable Cost $1,131,000
Less: Fixed manufacturing Overhead $440,000
Less: Fixed General and Administrative Costs $102,000
Income Under Variable costing $1,777,000
Workings
Variable cost = (15,000 Units x ($ 30 + $ 25 + $ 15 + ($ 81,000 / 15,000)
Variable cost = $1,131,000
The Difference in Net Income = $ 1,887,000 - $1,777,000 = $110,000
