Variable and Absorption Costing Grant Company sells its product for $57 per unit. Variable manufacturing...
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Variable and Absorption Costing Grant Company sells its product for $57 per unit. Variable manufacturing costs per unit are $35, and fixed manufacturing costs at the normal operating level of 18,000 units are $90,000. Variable selling expenses are $5 per unit sold. Fixed administrative expenses total $155,000. Grant had 7,000 units at a per-unit cost of $40 in beginning inventory in 2016. During 2016, the company produced 18,000 units and sold 20,000. Would net income for Grant Company in 2016 be higher if calculated using variable costing or using absorption costing? Calculate reported income using each method. Do not use negative signs with any answers. Absorption Costing Income Statement Sales Cost of Goods Sold: Beginning Inventory Variable Costs Fixed Costs Less: Ending Inventory Cost of Goods Sold Administrative expense Net Income Variable Costing Income Statement Sales Cost of Goods Sold: Beginning Inventory Variable Costs Variable cost of goods sold Fixed costs: Variable Costing Income Statement Sales 2$ Cost of Goods Sold: Beginning Inventory Variable Costs Variable cost of goods sold Fixed costs: Administrative Expense Total Fixed Cost $4 Net Income
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