Question: X Ltd makes widgets. It has no opening inventory Budgeted and actual fixed manufacturing costs are $100,000 Budgeted and actual fixed non-manufacturing costs are $40,000

X Ltd makes widgets.

It has no opening inventory

Budgeted and actual fixed manufacturing costs are $100,000

Budgeted and actual fixed non-manufacturing costs are $40,000

Budgeted and actual production is 10,000 units

Variable manufacturing cost was $30 per unit

The variable non-manufacturing cost was $5 per unit sold

X Ltd sold 9,000 units at $60 per unit

Calculate the Operating Income according to both Absorption and Variable costing and explain the difference

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