Question

Hong Co. had net income of $392,100 under variable costing. Beginning and ending inventories were 3,200 units and 4,500 units, respectively. Fixed overhead cost was $4.60 per unit for both the beginning and ending inventory. What is net income under absorption costing

Answer 1

the net income under absorption costing is $398,080

Step-by-step explanation:

The computation of the net income under absorption costing is shown below:

= Net income under variable costing + (change in inventory units × fixed overhead cost per unit)

= $392,100 + ((4,500 units - 3,200 units) × $4.60)

= $392,100 + $5,980

= $398,080

Hence, the net income under absorption costing is $398,080

We simply applied the above formula so that the correct value could come

And, the same is to be considered