Docherty,Inc.reports the following information for the year ended December 31:

The operating income calculated using variable costing and absorption costing amounted to $9800 and $11,000,respectively.There were no beginning inventories.Determine the total number of units produced during the year.

Question

Docherty,Inc.reports the following information for the year ended December 31:

The operating income calculated using variable costing and absorption costing amounted to $9800 and $11,000,respectively.There were no beginning inventories.Determine the total number of units produced during the year.

Quizplus · Accepted Answer

B)Number of units in the ending Finished Goods Inventory = (Profit using absorption costing - Profit using variable costing)/ Fixed manufacturing overhead per unit =
($11,000 - $9800)/ $25 per unit = 48 units
Number of units produced = Units sold + Ending Inventory - Beginning Inventory
Number of units produced = 600 units + 48 units - 0 = 648 units