Reference no: EM132621133

Consider the following:

Sales price, per unit                              $18 per unit

Standard absorption cost rate               $12 per unit

Standard variable cost rate                   $8 per unit

Variable selling expense rate                    $2 per unit

Fixed selling and administrative expenses      $40,000

Fixed manufacturing overhead                       $60,000

Problem 1: Last period, 13,000 units were produced. In the current period, 15,000 units were produced. In each period, 13,000 units were sold. What is the difference in reported income under absorption and variable costing for the current period?

Option 1: The variable-costing income exceeded absorption-costing income by $4,000

Option 2: The absorption-costing income exceeded variable-costing income by $8,000

Option 3: The variable-costing income exceeded absorption-costing income by $6,000

Option 4: The absorption-costing income exceeded variable-costing income by $12,000