The Following Data Are Available for Ruggles Company for the Year

question 137

Essay

The following data are available for Ruggles Company for the year ended September 30, 2019. Manufacturing costs incurred:
Nonmanufacturing costs incurred:
Required:
a.Determine operating income using the variable costing approach.
b.Determine operating income using the absorption costing approach.
c.Explain why the income was different each year using the two methods.Show computations.

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Definitions:

JIT Inventory

JIT inventory, or Just-In-Time inventory, is a management strategy that aligns raw-material orders from suppliers directly with production schedules to reduce stock levels.

Just in Time

The Just in Time (JIT) methodology is an inventory management strategy that aims to reduce waste and increase efficiency by receiving goods only as they are needed in the production process.

Suppliers

Entities or individuals that provide goods or services to other entities or individuals, typically within a business or manufacturing process.

Short-term Financing

Refers to the obtaining of loans or other monetary support for a period of typically less than one year, to address immediate financial needs.