Question

The operating income calculated using variable costing and absorption costing amounts to $9,100 and $11,200. There were no beginning inventories. Determine the total fixed manufacturing overhead that will be expensed under absorption costing for the year.

Answer 1

$2,100

Step-by-step explanation:

The difference between variable costing income and absorption costing income arises due to fixed cost deferred in inventory. This is the total fixed manufacturing overhead that will be expensed under absorption costing.

Calculation :

Fixed Cost in Inventory = $11,200 - $9,100

= $2,100