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Ruggles Company Has Provided the Following Data for the Year

Question 298

Essay

Ruggles Company has provided the following data for the year ended 30 September 2018.
 Sales: 24000 units at $50 each  Expected and actual production: 30000 units  Manufacturing costs incurred:  Variable: $525000 Fixed: $372000 Nonmanufacturing costs incurred:  Variable: $144800 Fixed: $77400 Beginning inventories:  none \begin{array}{lr}\text { Sales: } & 24000 \text { units at } \$ 50 \text { each } \\\text { Expected and actual production: } & 30000 \text { units } \\\text { Manufacturing costs incurred: } &\\\text { Variable: } & \$ 525000 \\\text { Fixed: } & \$ 372000\\\text { Nonmanufacturing costs incurred: }\\\text { Variable: } & \$ 144800 \\\text { Fixed: } & \$ 77400 \\\text { Beginning inventories: } & \text { none }\end{array}
Required:
a.Determine operating profit using the variable-costing approach.
b.Determine operating profit using the absorption-costing approach.
c.Explain why operating profit is not the same under the two approaches.
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Correct Answer:

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a.24 000 × $50 = $1 200 000 sales
($525 ...

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