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.
A)$20,400
B)$17,700
C)$33,630
D)$30,680

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.
A)$20,400 
B)$17,700 
C)$33,630 
D)$30,680

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