Operating income using absorption costing

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Reference no: EM13748095

Alvin Inc. planned and actually manufactured 200,000 units of its single product in 2008, its first year of operations. Variable manufacturing costs were $30 per unit of product. Planned and actual fixed manufacturing costs were $600,000, and marketing and administrative costs totaled $400,000 in 2004. Alvin sold 120,000 units of product in 2008 at a selling price of $40 per unit.

1. Alvin’s 2008 operating income using variable costing is

A) $800,000

B) $600,000

C) $440,000

D) $200,000

2. Alvin’s 2008 operating income using absorption costing is

A) $840,000

B) $800,000

C) $440,000

D) $200,000

Reference no: EM13748095

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