The following data are available for Ruggles Company for the year ended September 30, 2012.
Sales:
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.
Definitions:
Assembly Line
A manufacturing process in which parts are added to a product in a sequential manner to create a finished product efficiently.
Fabrication Line
A machine-paced, product-oriented facility for building components.
Process-Oriented Layout
A layout that deals with low-volume, high-variety production in which like machines and equipment are grouped together.
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