Eganville Company Has Per-Unit Fixed and Variable Manufacturing Costs of $40

question 96

Essay

Eganville Company has per-unit fixed and variable manufacturing costs of $40 and $15, respectively. Variable selling and administrative costs are $9 per unit. Consider the two independent cases that follow for the firm.
Case A: Variable-costing net income, $110,000; sales, 6,000 units; production, 6,000 units
Case B: Variable-costing net income, $178,000; sales, 7,500 units; production, 7,100 units
Required:
A. From a product-costing perspective, what is the basic difference between absorption costing and variable costing?
B. Compute Eganville's absorption-costing net income in Case A.
C. Compute Eganville's absorption-costing net income in Case B.

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Definitions:

Shared Power Strategy

A management approach that distributes decision-making authority and power more evenly across levels within the organization.

Collaborative Strategy

An approach to business that emphasizes working together with partners, teams, or stakeholders to achieve shared goals or solve problems.

Planned Change Process

The deliberate effort to improve an organization's operations or direction through specific methodologies and strategies.

Unfreezing

The initial phase in the change process, where existing behaviors or attitudes are challenged to prepare for change.