Pacific Sports Operating Income, Business Finance Homework help
Pacific Sports, Inc. makes surf boards. Following are inventory and cost figures relative to the year ended June 30 2013:
Beginning inventory 1,000 units
Produced 10,000 units
Sold 8,000 units
Sales price per unit $500
Variable production costs per unit $200
Fixed production costs unit $100
SG&A Expenses $1,000,000
Required:
- Compute the operating income using the absorption method.
- Compute the operating income using the variable costing method.
- Reconcile the difference.
- Why might a company choose to use variable costing for management purposes?
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