Final answer:
The net income under absorption costing, considering the change in inventory levels and the fixed overhead per unit costs, should be $913,130. However, this result does not match any of the provided answer options, implying there might be an error in the question data or provided options.
Step-by-step explanation:
To calculate the net income under absorption costing, we must consider the fixed overhead costs for the inventories at the beginning and end of the period. The fixed overhead per unit is given to be $2.05. The difference in the number of units in the inventories is the change in fixed overhead costs that need to be accounted for under absorption costing.
First, we calculate the change in inventories in units:
- Beginning Inventory: 56,600 units
- Ending Inventory: 55,200 units
- Change in Inventory: 56,600 - 55,200 = 1,400 units
Next, we calculate the total fixed overhead cost that should be absorbed by the change in inventory:
Change in Inventory x Fixed Overhead per Unit = 1,400 units x $2.05/unit = $2,870
Since the ending inventory is less than the beginning inventory, this amount represents an additional cost that was not included in the net income based on variable costing. Thus, we subtract this from the net income under variable costing to find net income under absorption costing:
Net Income under Variable Costing - Additional Absorbed Fixed Costs = $916,000 - $2,870 = $913,130
This result, $913,130, is not listed among the options provided, suggesting a possible error in the figures or options given in the initial question. Based on the information provided and the calculation, none of the options (a) to (e) provided are correct.