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Question: woodworth industries manufactures ard sels a single product the controller...

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Woodworth Industries manufactures ard sels a single product. The controller has prepared the tolowing ncome statement for the most recent year: EE (Click the icon to view the data.) Requirements 1. Wa the companys operaning income under variable costing be higher, lower or the same as its operaing income under absorption costing? Whmy? 2. Project the companys operating income under variable costing without preparing a varable costing The company produced 9,000 units and sold 8.000 units during the year ending December 31. Fixed marulactringoverhead MOH) for the year was S162000. The company had no beginning inventory ncome stanement while fixed operating expenses were $54,000 3 Prepare a variaple costing income satement for the year Woodworths operating income under variable costing willbe lower t han its operating income under absorption costing This is because under absorption costing, some of the fxed MOH remans Trapped on the balance al sxed MOH inoured during the period is expensed as a period cost sheet as part of the cost of inventory. Under variable costing oosting without preparing a varisble costing income statement Requirement 2. Project the companys operating income under variable Degin by selecing the oomect formula to reconcile the dfference between the two income tigures. Then entor the amounts to calouiate the diflerence in operating income. Change in inventory level in units x Fhed MOH per unt 18 Dference in operating income 1,000 18.000 Now caculate Woodworths projected operating ncome (oas) under variabie oosing, (Use a minus sign or parenthoses for a los) Projected operating income esa) under variable cosing 24000
Woodworth Industries Traditional Income Statement (Absorption Costing) For the Year Ended December 31 Sales revenue Less: Cost of goods sold Gross profit Less: Operating expenses Operating income $ 568,000 472,000 $96,000 72,000 $24,000 $ 24,000 Print Done
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