Pacific Sports Operating Income, Business Finance Homework help
Pacific Sports Operating Income, Business Finance Homework help
Pacific Sports, Inc. makes surf boards. Following are inventory and cost figures relative to the year ended June 30 2013:
Beginning inventory 1,000 units
Produced 10,000 units
Sold 8,000 units
Sales price per unit $500
Variable production costs per unit $200
Fixed production costs unit $100
SG&A Expenses $1,000,000
Required:
- Compute the operating income using the absorption method.
- Compute the operating income using the variable costing method.
- Reconcile the difference.
- Why might a company choose to use variable costing for management purposes?
