Absorption and variable costing. (CMA) Miami, Inc., planned and actually manufactured 250,000 units of its single product in 2017, its first year of operation. Variable manufacturing cost was $19 per unit produced. Variable operating (nonmanufacturing) cost was $13 per unit sold. Planned and actual fixed manufacturing costs were $750,000. Planned and actual fixed operating (nonmanufacturing) costs totaled $420,000. Miami sold 170,000 units of product at $41 per unit.
Required
1. Miami’s 2017 operating income using absorption costing is (a) $600,000, (b) $360,000, (c) $780,000, (d) $1,020,000, or (e) none of these. Show supporting calculations.
2. Miami’s 2017 operating income using variable costing is (a) $1,100,000, (b) $600,000, (c) $360,000, (d) $780,000, or (e) none of these. Show supporting calculations.
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