Toth, Inc. had net income of $950,000 based on variable costing. Beginning and ending inventories were 60,000 units and 56,000 units, respectively. Assume the fixed overhead cost per unit was $.85 for both the beginning and ending inventory. What is net income under absorption costing?
What will be an ideal response?
Income under variable costing + FOH in Ending inventory - FOH in Beginning inventory = Income under absorption costing
$950,000 + (56,000 units × $.85) - (60,000 × $.85) = $946,600
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