Mortech Company had net income of $250,000 based on variable costing. Beginning and ending inventories were 50,000 units and 48,000 units, respectively. Assume the fixed overhead per unit was $0.75 for both the beginning and ending inventory. What is net income under absorption costing?

Net income under absorption costing would be $ 250,000

Explanation:

Mortech Company

Net Income variable costing  $250,000

Variable Costing                             Absorption Costing

Sales                                                 Sales

Less Variable Costs                         Less Product Costs ( Variable + Fixed)

Contribution Margin                        Gross Profit

Less Fixed Costs                            Less Period Costs ( Variable +fixed)

Net Profit                                           Net Profit

Net income under both the methods remains the same unless there is a difference in fixed costs for certain items.

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the investment was $14,174.196

explanation:

a lump sum means that the father of the example made one deposit and leave it be.

we need to know the value of a capital that generated at 4.05% per year during 28 years the sum of $48,613.24

now clearing the formula to solve for capital we got:

and we reach the answer investment = $14,174.20