Joe's Tires,Inc.reports the following information for the year ended December 31:

The operating income calculated using variable costing and absorption costing amounted to $9,200 and $11,900,respectively.There were no beginning inventories.Determine the total fixed manufacturing overhead that will be expensed under absorption costing for the year.

Question

Joe's Tires,Inc.reports the following information for the year ended December 31:

The operating income calculated using variable costing and absorption costing amounted to $9,200 and $11,900,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 = 590 units × $30 per unit = $17,700