Absorption and Variable Costing Comparisons: Production Equals Sales Assume that Smuckers manufactures and sells 30,000 cases of peanut butter each quarter. The following data are available for the third quarter of 2017.
Total fixed manufacturing overhead90,000
Fixed selling and administrative expenses .. . .. . .. . . . . .. . . . . . 20,000
Sale price per case32
Direct materials per case 15
Direct labor per case 6
Variable manufacturing overhead per case 3
a. Compute the cost per case under both absorption costing and variable costing.
b. Reconcile any differences in income. Explain.
c. Compute te net income under both absorption costing and variable costing.