Grainger Company produces only one product and sells that product for $110 per unit. Cost information for the product is as follows:
Direct Material $15 per Unit
Direct Labor $25 per Unit
Variable Overhead $5 per Unit
Fixed Overhead $33,500
Selling expenses are $3 per unit and are all variable. Administrative expenses of $15,000 are all fixed. Grainger produced 5,000 units; sold 4,000; and had no beginning inventory.
A. Compute net income under:
i. Absorption Costing $
ii. Variable Costing $
B. Which costing method provide higher net income? By how much?
The method provided more net income by $ .
Answers: 3
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