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

The operating income calculated using variable costing and absorption costing amounted to $10,000 and $12,700,respectively.There were no beginning inventories.Determine the total fixed manufacturing overhead that will be expensed under absorption costing for the year.

Question

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

The operating income calculated using variable costing and absorption costing amounted to $10,000 and $12,700,respectively.There were no beginning inventories.Determine the total fixed manufacturing overhead that will be expensed under absorption costing for the year.

Quizplus · Accepted Answer

B)Under absorption costing,fixed manufacturing overhead is treated as a product cost and is expensed when the units sold are sold.
Therefore,total fixed manufacturing overhead cost expensed under absorption costing = 620 units × $12 per unit = $7440