Entel Corporation creates an accounting computer program This year Entel
Entel Corporation creates an accounting computer program. This year, Entel Corporation produced 20,000 units of their program and sold 22,000 units. Each unit sells for $250. Selected operational and financial data are shown below.
Variable costs per unit:
Direct materials .......$ 15.00
Direct labor ......... 40.00
Manufacturing overhead .... 5.00
Selling and administrative ... 2.00
Fixed costs per unit:
Manufacturing overhead ...$200,000
Selling and administrative ... $150,000

Required
A. Calculate Entel’s net income using absorption costing.
B. Will income be higher or lower if calculated using variable costing?
C. By how much?

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