The Following Table Shows Inventory Balances, in Units, for Years

question 21

Essay

The following table shows inventory balances, in units, for years 1, 2 and 3. Total fixed costs were $20,000 for each of the last three years. The units in year 1 beginning inventory were based on production of 500 units.
Required:

For each year, calculate the difference between absorption costing and variable costing operating income. Indicate which costing system has the highest income each year. Assume the LIFO method is used in year three.

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Definitions:

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A complex network of cells, tissues, and organs in the body that works to defend against infectious diseases and foreign invaders.

Stress

A psychological and physical response to demands or threats, which can affect mental health and overall well-being.

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The conscious deliberate attempt to push away or hide from conscious awareness thoughts, feelings, or desires deemed unacceptable or uncomfortable.

Optimist

An individual who generally believes that good things will happen and that outcomes will be favorable.