A manufacturer reports the following information below for its first three years in operation. Income for year 1 using absorption costing is:
A) $76,000.
B) $82,400.
C) $88,800.
D) $106,600.
E) $111,000.

Question

A manufacturer reports the following information below for its first three years in operation.  Income for year 1 using absorption costing is:
A) $76,000. 
B) $82,400. 
C) $88,800. 
D) $106,600. 
E) $111,000.

Quizplus · Accepted Answer

Income under absorption costing = Income under variable costing − FOH beginning inventory + FOH ending inventory
Year 1:
$76,000 − (0 units × $8.00) + (800 units × $8.00) = $82,400

A Manufacturer Reports the Following Information Below for Its First