Consider the following information for SMART Corporation for the calendar year 2015:

• The company produced 900 units and sold 1,000 units, both as budgeted.
• Work-in-process inventories were unchanged during the period.
• Variable costs per unit remain constant from last period to the current period.
• Fixed overhead costs remain total from last period to current period
• Production remained constant from last period to current period.
• Budgeted and actual fixed costs were equal, all variable manufacturing costs are affected by volume of production only, and all variable selling costs are affected by sales volume only.

Budgeted per unit revenues and costs were as follows:

Per-Unit

Sales price $100

Direct materials 30

Direct labor 20

Variable overhead 10

Fixed overhead 5

Variable selling 12

Fixed selling 4

Fixed administrative 2

QUESTIONS

1) Which method of costing will result in HIGHER income being reported AND by how much?

2) If the ending inventory was 1,000 units, compute the ending inventory amount under Absorption Costing.

3) The operating income under Variable Costing will be (show ANY relevant computations)

4) The contribution margin per unit is:

Answer rating: 100% (QA)

SMART Corporation Costing Analysis 2015 1 Method for Higher Income Under absorption costing SMART Corporation will report higher income in 2015 Reason... View the full answer