How much higher or lower would the companys first-year net, Ask an Expert

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Reese's Tot Toy Boxes uses variable costing to manage its internal operations. Th e following data relate to the company's first year of operation, when 25,000 units were produced and 21,000 units were sold.

Variable costs per unit
Direct material $50
Direct labor 30
Variable overhead 14
Variable selling costs 12
Fixed costs
Selling and administrative $750,000
Manufacturing 500,000

How much higher (or lower) would the company's first-year net income have been if absorption costing had been used rather than variable costing? Show computations.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9443981

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