Reference no: EM132560572

ABC Ltd makes widgets. It has no opening inventory and the closing inventory is 500 units. The budgeted and actual fixed manufacturing costs are $1,000 and the budgeted and actual production is 2,000 units.

The variable manufacturing cost was $2 per unit and the selling price was $8 per unit. Sales commissions of 4.5% of sales revenue are paid to sales people.

Other non-manufacturing fixed costs total $500.

Question 1: What is the difference in profit between variable and absorption costing?

Select one:

Option 1: $500

Option 2: $1,000

Option 3: $750

Option 4: $250