Chapter_8_Breakout_Section_Notes

Chapter_8_Breakout_Section_Notes - Fixed Manufacturing...

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Fixed Manufacturing Overhead Per Year: $600,000 Units Produced FMOH per unit 10,000 $60 12,000 $50 8,000 $75 Variable Costing Year One Year Two Units Produced 10,000 10,000 Units Sold 10,000 10,000 FMOH in IS $600,000 $600,000 FMOH in Inven. $0 $0 Year One Year Two Units Produced 12,000 8,000 Units Sold 10,000 10,000 FMOH in IS $600,000 $600,000 FMOH in Inven. $0 $0 Absorption Costing Year One Year Two Units Produced 10,000 10,000 Units Sold 10,000 10,000 FMOH in COGS $600,000 $600,000 FMOH in Inven. $0 $0
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Year One Year Two Units Produced 12,000 8,000 Units Sold 10,000 10,000 FMOH in COGS $500,000 $700,000 FMOH in Inven. $100,000 ($100,000) Relation between Effect Relation between production on variable and and sales iniventory absorption income Inventory Absorption Production > Sales increases > Variable Inventory Absorption Production < Sales decreases < Variable Absorption Production = Sales No change = Variable
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Lake Corporation uses absorption costing to prepare its financial statements for the annual
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This note was uploaded on 10/20/2011 for the course ACC 222 taught by Professor Brewer during the Spring '08 term at Miami University.

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Chapter_8_Breakout_Section_Notes - Fixed Manufacturing...

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