Question

Last year, a Corporation's variable costing net operating income was $52,400 and its inventory decreased by 1,400 units. Fixed manufacturing overhead cost was $8 per unit for both units in beginning and in ending inventory. What was the absorption costing net operating income last year

Answer 1

Answer:

The net operating income is $41,200

Explanation:

The computation of the absorption costing net operating income last year is shown below:

= Net operating income - decrease in inventory units × Fixed manufacturing overhead cost per unit

= $52,400 - 1,400 units × $8 per unit

= $52,400 - $11,200

= $41,200

hence, the net operating income is $41,200