Grant Company sells its product for $56 per unit. Variable manufacturing costs per unit are $34, and fixed manufacturing costs at the normal operating level of 18,000 units are $90,000. Variable selling expenses are $3 per unit sold. Fixed administrative expenses total $155,000. Grant had 7,000 units at a per-unit cost of $39 in beginning inventory in 2016. During 2016, the company produced 18,000 units and sold 20,000. Would net income for Grant Company in 2016 be higher if calculated using variable costing or using absorption costing?

 

Calculate reported income using each method. Do not use negative signs with any answers. Absorption Costing Income Statement Sales Cost of Goods Sold: 273,000 612,000 90,000 170,000 Beginning Inventory Variable Costs Fixed Costs Less: Ending Inventory Cost of Goods Sold Variable selling expense Manufacturing cost Administrative expense Net Income $ 1,120,000 0 0 0 0 0 LA $