Problem #$2$:

Facts: During the year, C$.$ Stroud Inc. produced $30,000$ units and sold $35,000$ units $($the company has

been in business for many years and had a significant beginning inventory$).$ The selling price per unit is

$$9.$ The following additional information is available:

$-$ Fixed Manufacturing Overhead: $$90,000$

$-$ Fixed Selling & Administrative: $$106,000$

$-$ Variable Manufacturing Cost $($DM $+$ DL $+$ MOH$)$: $$8/$unit

$-$ Variable Selling & Administrative: $$5/$unit

Required:

What is the net income for the year under absorption costing?

What is the net income for the year under variable costing?

Why is net income not the same under both absorption and variable costing