Calculate net income under absorption costing for each year

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Reference no: EM133442574

Question: Conan Company produces sporting equipment. In 2019, the first year of operations, Conan produced 25,000 units and sold 18,000 units. In 2020, the production and sales results were exactly reversed. In each year, selling price was $100, variable manufacturing costs were $40 per unit, variable selling expenses were $8 per unit, fixed manufacturing costs were $540,000, and fixed administrative expenses were $200,000. Instructions

a) Calculate net income under variable costing for each year.

b) Calculate net income under absorption costing for each year.

c) Reconcile the differences each year in income from operations under the two costing approaches.

Reference no: EM133442574

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