M&H's unit production cost under variable costing is $25, and $32 under absorption costing.Net income under variable costing was $250,000 and $187,000 under absorption costing last year.Production equalled 63,000 units.How many units did M&H sell?
A)72,000
B)54,000
C)70,000
D)56,000

Question

Quizplus · Accepted Answer

Explanation:Variable costing net income = Contribution margin - Fixed costs$250,000 = (63,000 x $25) - Fixed costsFixed costs = $250,000 - $1,575,000 = $1,325,000Absorption costing net income = Sales - Cost of goods sold - Fixed costs$187,000 = Sales - (63,000 x $32) - $1,325,000Sales = $187,000 + $2,016,000 + $1,325,000 = $3,528,000Units sold = Sales / Unit selling priceUnits sold = $3,528,000 / $50 = 70,560 units

M&H's Unit Production Cost Under Variable Costing Is $25, and $32