Caspian Company produced 20000 units and sold 18000 unitsdurig the current year. Under absorption
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Caspian Company produced 20000 units and sold 18000 unitsdurig the current year. Under absorption

Caspian Company produced 20,000 units and sold 18,000 unitsdurig the current year. Under absorption costing, net income was$25,000. Fixed overhead was $190,000. Determine the net incomeunder variable costing.

Solution

Sxaxexexx xxoxixxxoxxuxaxioxxPaxxixuxaxxAxouxxFixed Oxexxeax     190,000.00No of uxixx produced       20,000.00Fixex Oxexxeax per uxix =190,000/20,000                 9.50Cxoxixx Sxoxx = 20,000 - 18,000         2,000.00Toxax xixex cost ix closing xxoxx xaxxiexxoxxaxx       19,000.00This xeaxx that ix axxoxxxioxxoxxixx 19,000 fixed xoxx was xexxTxux xoxx under xaxiaxxexoxxixx would xe xoxe xy 19,000Txux net ixxoxe uxxex xaxiaxxexoxxixx is 25,000 -19,000         6,000.00

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