Problem:
Third, Inc. which makes a single product had the following information for 2010.
Selling Price $8.00 per unit
Denominator (Planned production) 100,000 units
Production 90,000 units
Sales 80,000 units
Beginning Inventory -0-
Fixed Manufacturing Costs $70,000
Fixed Operating Expenses $20,000
Variable costs and expenses per unit $5.00
Variable Operating Expenses $1.00
The denominator level of activity is 100,000 units.
REQUIRED: SHOW WORK ON WORK SHEET PROVIDED.
1. Absorption Gross Profit for 2010. ____________
2. Absorption Net Income for 2010. ____________
3. Variable Total Contribution for 2010. ___________
4. Variable Net Income for 2010. __________
5. One factor that causes answers 2 and 4 to differ.