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Jupiter Corporation incurred fixed manufacturing costs of $18,000 during 2017. Other information for 2017 includes:
The budgeted denominator level is 2,400 units
Units produced total 2,700 units
Units sold total 1,600 units
Variable cost per unit is $4
Beginning inventory is zero
The fixed manufacturing cost rate is based on the budgeted denominator level.
The operating income using variable costing will be​ ________ as compared to the operating income under absorption costing.​ (Round any intermediary calculations to the nearest cent and your final answer to the nearest​ dollar.)
O higher by $8,250.00
O lower by $2,250.00
O lower by $8,250.00
O higher by $2,250.00

Respuesta :

Answer:

Lower by $8,250

Explanation:

The operating income reported will be different as the unit level of inventory increased during the  account period .

Denominator rate:

= Fixed manufacturing costs ÷ Budgeted denominator level

= 18,000 ÷ 2,400

= 7.5

Operative income:

= Total Units produced - (Total units sold × Denominator rate)

= 2,700 - (1,600 × 7.5 )

= 1,100 × 7.5

= $8,250

Lower by $8,250 under the variable costing because 8250 of fixed manufacturing cost remain in  inventory under absorption.

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