Exam 7: Income Effects of Alternative Cost Accumulation Systems

Laguna Company had a net income of £25,000 using variable costing and a net income of £34,600 using absorption costing. The product cost using variable costing was £10.20 and using absorption costing was £15. If 10,000 units were sold, how many units were produced during?

Figure 7-4 The following information pertains to Stark Ltd.: Beginning inventory 0 units Ending inventory 5,000 units Direct labour per unit £20 Direct materials per unit 16 Variable overhead per unit 4 Fixed overhead per unit 10 Variable selling costs per unit 12 Fixed selling costs per unit 16 -Refer to Figure 7-4. What is the value of ending inventory using the absorption costing method?