Question: Deloitte uses absorption costing with fixed overhead $4,000,000, variable overhead $1,500,000, direct materials $700,000, and direct labor $3,000,000. Requirements: Calculate the overhead absorption rate. Prepare

  1. Deloitte uses absorption costing with fixed overhead $4,000,000, variable overhead $1,500,000, direct materials $700,000, and direct labor $3,000,000.
    • Requirements:
      • Calculate the overhead absorption rate.
      • Prepare an income statement using absorption costing.
      • Compare absorption costing with variable costing results.
      • Discuss the implications of absorption costing for managerial decision-making.

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