Response to the following problem:
In preparing for a meeting the controller accumulated the following data.
Beginning inventory 25,000
Units produced 100,000
Units sold 105,000
Fixed manufacturing overhead $400,000
Direct materials per unit $25.00
Direct labor per unit $35.00
Variable manufacturing overhead per unit $15.00
A. Compute the cost per unit, using absorption costing.
B. Compute the cost per unit, using variable costing.
C. Compute the difference in net income between the two methods. Which costing method results in the higher net operating income?
D. Assume that production was 100,000 units and sales were 70,000 units. What would be the difference in the methods? Which costing method shows the greater net operating income?
E. Assume that production was 100,000 units and sales were 100,000 units. What would be the two methods? F. Which methods is required by generally accepted accounting principles?