Vision Tester, Inc., a manufacturer of optical glass, began operations on February 1 of the current year. During this time, the company produced 900,000 units and sold 800,000 units at a sales price of $12 per unit. Cost information for this year is shown in the following table:

Production costs
Direct materials	$0.80 per unit
Direct labor	$0.70 per unit
Variable overhead	$500,000 in total
Fixed overhead	$450,000 in total
Non-production costs
Variable selling and administrative	$30,000 in total
Fixed selling and administrative	$490,000 in total

Given this information, which of the following is true?

Net income under variable costing will exceed net income under absorption costing by $50,000.

Net income under absorption costing will exceed net income under variable costing by $50,000.

Net income will be the same under both absorption and variable costing.

Net income under variable costing will exceed net income under absorption costing by $60,000.

Net income under absorption costing will exceed net income under variable costing by $60,000.

Answer rating: 100% (QA)

Solution Answer Net income under absorption costing will exceed net income ... View the full answer