Asked by Priscilla Nkoloma on May 09, 2024
Verified
At XLT Inc., variable costs are $80 per unit, and fixed costs are $40,000. Sales are estimated to be 4,000 units.
a. How much would absorption costing operating income differ between a plan to produce 8,000 units and a plan to produce 10,000 units?
b. How much would variable costing operating income differ between the two production plans?
Variable Costing
An accounting approach where only variable production costs are included in product costs, with fixed overhead expenses treated as period costs.
Operating Income
Income generated from normal business operations, excluding costs and expenses.
- Calculate variable and absorption costing operating income and understand their differences.
- Understand the impact of production level changes on income under both costing methods.
Verified Answer
MA
Marie AhernMay 13, 2024
Final Answer :
a. 
b.There would be no difference in variable costing operating income between the two plans.
b.There would be no difference in variable costing operating income between the two plans.
Learning Objectives
- Calculate variable and absorption costing operating income and understand their differences.
- Understand the impact of production level changes on income under both costing methods.
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