Garfield Company has the following information for the current year: Beginning fixed manufacturing overhead in inventory $230,000 Fixed manufacturing overhead in production 850,000 Ending fixed manufacturing overhead in inventory 50,000 Beginning variable manufacturing overhead in inventory $40,000 Variable manufacturing overhead in production 140,000 Ending variable manufacturing overhead in inventory 30,000 What is the difference between operating incomes under absorption costing and variable costing?

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Zviko Zviko · Answer 1 · 2020-08-14T02:54:13+02:00

Answer:

the difference between operating incomes under absorption costing and variable costing is $180,000 .

Explanation:

The difference between the two Operating Incomes lies in the amount of Fixed Overheads that has been deferred in Inventory.

So, calculation of the difference will be as follows :

Beginning fixed manufacturing overhead in inventory $230,000

Less Ending fixed manufacturing overhead in inventory ($50,000)

Difference between absorption costing and variable costing $180,000