SamTech Company Has Two Identical Divisions,East and West

question 44

Essay

SamTech Company has two identical divisions,East and West.Their sales,production volume,and fixed manufacturing costs have been the same for the last five years.The amounts for each division were as follows:

East Division uses absorption costing and West Division uses variable costing.Both use FIFO inventory methods.Variable manufacturing costs are $5 per unit.Selling and administrative expenses were identical for each division.There were no inventories at the beginning of Year 1.
Required:
Which division reports the highest income each year? Explain.

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Definitions:

Accounts Payable

Financial obligations or debts a company owes to its suppliers or creditors for goods and services received.

Medical Assistant

A healthcare professional who supports medical practices by performing various administrative and clinical tasks.

Managerial Accounting

The study and analysis of financial data as it applies to operational issues within a company; also known as cost accounting.

Operational Issues

Problems or challenges that arise in the day-to-day workings of any operation, potentially hindering its efficiency or effectiveness.