Raymond Company reported the following units of production and sales for June and July:
Net income under absorption costing for June was $40,000; net income under variable costing for July was $50,000. Fixed manufacturing costs were $600,000 for each month.
-Refer to the Figure.What was the net income for July using absorption costing?
A)$20,000
B)$40,000
C)$50,000
D)$80,000

Question

Raymond Company reported the following units of production and sales for June and July:
Net income under absorption costing for June was $40,000; net income under variable costing for July was $50,000. Fixed manufacturing costs were $600,000 for each month. 
-Refer to the Figure.What was the net income for July using absorption costing?
A)$20,000 
B)$40,000 
C)$50,000 
D)$80,000

Quizplus · Accepted Answer

Absorption costing includes fixed manufacturing costs as part of the product cost. In this case, the fixed manufacturing costs are $20,000. The net income for July using absorption costing is $80,000 - $20,000 = $60,000.

Raymond Company Reported the Following Units of Production and Sales