Compute operating income using absorption costing

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Reference no: EM132853751

INCOME DIFFERENCES

Exercise #1

Using Variable (Direct) costing, Play Co had an operating income of $180,000.
Beginning Inventory 20,000 units Ending Inventory 30,000 units
There was no Volume (Denominator) Variance.
Budgeted Fixed MOH rate is $10.00 per unit.

REQUIRED: Compute operating income using absorption costing.

Exercise #2

Using Variable (Direct) costing, Sonic Corp. had an operating income of $270,000.
Beginning Inventory 20,000 units Ending Inventory 15,000 units
There was no Volume (Denominator) Variance.
Sony makes 5 units per hour.
Budgeted Fixed MOH rate is $45 per hour.

REQUIRED: Compute operating income using absorption costing.

Reference no: EM132853751

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