Reference no: EM131664537

Question: Absorption and variable costing. (CMA) Miami, Inc., planned and actually manufactured 250,000 units of its single product in 2017, its first year of operation. Variable manufacturing cost was $19 per unit produced. Variable operating (nonmanufacturing) cost was $13 per unit sold. Planned and actual fixed manufacturing costs were $750,000. Planned and actual fixed operating (nonmanufacturing) costs totaled $420,000. Miami sold 170,000 units of product at $41 per unit.

1. Miami's 2017 operating income using absorption costing is

(a) $600,000,

(b) $360,000,

(c) $780,000,

(d) $1,020,000, or

(e) none of these. Show supporting calculations.

2. Miami's 2017 operating income using variable costing is

(a) $1,100,000,

(b) $600,000,

(c) $360,000,

(d) $780,000, or

(e) none of these. Show supporting calculations.