Question

Gammaro Company uses standard costing. Tim Sweeney, the new president of Gammaro Company, is presented with the following data for 2014:


1. At what percentage of denominator level was the plant operating during 2014?
2. How much fixed manufacturing overhead was included in the 2013 and the 2014 ending inventory under absorption costing?
3. Reconcile and explain the difference in 2014 operating incomes under variable and absorption costing.
4. Tim Sweeney is concerned: He notes that despite an increase in sales over 2013, 2014 operating income has actually declined under absorption costing. Explain how thisoccurred.


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  • CreatedMay 14, 2014
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