Absorpt Variabl Absorption Variable Absorp Variabl

ion e Costing Costing tion e

Costing Costin Finished Finished Costin Costin
Net g Net Inventory Inventory g g
Income Incom Bonus Bonus
e
Uni Dollar Unit Dollar
ts Value s Value
Larr 300 300
y $90,000. $90,00 0 $43,000. 0 $54,00 $22,50 $22,50
00 0.00 00 0.00 0.00 0.00
Moe 300 300
$46,250. $90,00 0 $147,75 0 $54,00 $11,56 $22,50
00 0.00 0.00 0.00 2.50 0.00
Curl 300 300
ey $148,31 $90,00 0 $104,01 0 $54,00 $37,07 $22,50
0.00 0.00 0.00 0.00 7.50 0.00

Comment:

The net income of the three manager differ depending on the costing method
used. Using the Variable costing method, the three manager earned the same
bonus of $22,500. This is because variable costing treat fixed cost as period cost
and the same amount of fixed cost would be recorded in respective of the
amount of unit produced. According to absorption costing method, Manager
Curley performed the best as he yielded a net income $148,310.00 and thereby
receiving a bonus of $37,077.00, the margin in the net income as a result of
Manager Curley producing more than he sold that is there were more unit or
produce to absorb the fixed cost unlike the other managers.