Groovelex Inc.reports the following information for the year ended December 31,2014:
-The operating profit calculated using variable costing and absorption costing amounted to $9,270 and $11,250,respectively.There were no beginning inventories.Determine the total fixed manufacturing overhead that will be expensed under variable costing for the year 2014.
A)$10,230
B)$8,250
C)$20,750
D)$25,000

Question

Groovelex Inc.reports the following information for the year ended December 31,2014:  
-The operating profit calculated using variable costing and absorption costing amounted to $9,270 and $11,250,respectively.There were no beginning inventories.Determine the total fixed manufacturing overhead that will be expensed under variable costing for the year 2014.
A)$10,230 
B)$8,250 
C)$20,750 
D)$25,000

Quizplus · Accepted Answer

The difference between the operating profits calculated using variable costing and absorption costing is equal to the fixed manufacturing overhead expensed under variable costing. Therefore, the total fixed manufacturing overhead that will be expensed under variable costing for the year 2014 is $11,250 - $9,270 = $1,980.