Question - McShane Inc. manufactures hair brushes that sell at wholesale for $60.00 per unit. Budgeted production in both 2009 and 2010 was 2,000 units and fixed overhead budgeted was $25,000 in each year. There was no beginning inventory in 2009. The following data summarized the 2009 and 2010 operations:
2009 2010
Units sold 2000 2000
units produces 2500 1500
Costs
Variable Mfg unti cost 20 20
Fixed factory overhead 25000 25000
Variable marketing unit cost 2 2
Fixed administrative 10000 10000
Required: Determine income under both full costing and variable costing and explain the difference.