Absorption vs$.$ variable costing

Reese's Tot Toy Boxes uses variable costing to manage its internal operations.

The following data relate to the company's first year of operation, when $15,000$ units were produced and $12,600$ units were sold.

Total Fixed Costs

How much higher $($or lower$)$ would the company's first$-$year net income have been if absorption costing had been used rather than variable costing?Absorption vs$.$ variable costing

Reese$$s Tot Toy Boxes uses variable costing to manage its internal operations.

The following data relate to the company$$s first year of operation, when $15,000$ units were produced and $12,600$ units were sold.

Variable Costs Per Unit

Direct material $$50\mathrm{.}00$

Direct labor $30\mathrm{.}00$

Variable overhead $14\mathrm{.}00$

Variable selling costs $12\mathrm{.}00$

Total Fixed Costs

Selling and administrative $$1,500,000$

Manufacturing $$300,000$

How much higher $($or lower$)$ would the company$$s first$-$year net income have been if absorption costing had been used rather than variable costing?

$Answer $1$

$0$

Answer $2$