Question

In 20X4, Bosh Corporation had income of $60,000 using absorption costing. Beginning and ending inventories were 13,000 and 8,000 units, respectively. The fixed manufacturing overhead cost was $4.00 per unit. What was the net income using direct/variable costing

Answer 1

Answer:

Net income under variable costing $80,000

Explanation:

The computation of the net income using direct/variable costing is shown below:

Net income under absorption costing $60,000

Add fixed cost under applied $20,000

Net income under variable costing $80,000

Working

Beginning inventory 13000

Less ending inventory -8000

Decrease in inventory 5000

Now under applied inventory $20,000