The following information pertains to Mayberry Corporation: $\begin{array}{lr}
\text { Beginning inventory } & 1,000 \text { units } \
\text { Ending inventory } & 6,000 \text { units } \
\text { Direct labour per unit } & \$ 40 \
\text { Direct materials per unit } & 20 \
\text { Variable overhead per unit } & 10 \
\text { Fixed overhead per unit } & 30 \
\text { Variable selling and admin. costs per unit } & 6 \
\text { Fixed selling and admin. costs per unit } & 14
\end{array}$ How would absorption costing net income compare to variable costing net income?

Question

Quizplus · Accepted Answer

Absorption costing net income would be $150,000 greater than variable costing net income because absorption costing includes fixed overhead costs in the cost of goods sold, while variable costing does not.

The Following Information Pertains to Mayberry Corporation How Would Absorption Costing Net Income Compare to Variable Costing