Y Company Reported Operating Income for Year 2 of $1,600,000

question 91

Essay

Y Company reported operating income for Year 2 of $1,600,000 under variable costing and $1,200,000 under absorption costing.The total variable manufacturing cost of the company's beginning finished goods inventory was $120,000.The cost of the company's end-of-year finished goods inventory under standard absorption costing was $50,000 higher than the cost of the beginning-of-year finished goods inventory under variable costing.
Required:
a)Calculate the cost of ending finished goods inventory under absorption costing.
b)Compare the operating incomes under absorption costing and variable costing.What do the numbers suggest in terms of relationship,if any,between units sold and units produced in Year 2? Explain.

---

Definitions:

Brain Changes

Alterations in the structure, function, or chemistry of the brain resulting from growth, learning, aging, or exposure to various experiences.

Pituitary

A small, pea-sized gland located at the base of the brain that produces hormones influencing various bodily functions, including growth and reproduction.

Adrenals

Glands located above the kidneys that produce hormones such as adrenaline and cortisol, which regulate stress response and other vital functions.