Question

Helmers Corporation manufactures a single product. Variable costing net operating income last year was $95,000 and this year was $113,900. Last year, $35,400 in fixed manufacturing overhead costs were released from inventory under absorption costing. This year, $13,500 in fixed manufacturing overhead costs were deferred in inventory under absorption costing. What was the absorption costing net operating income last year

Answer 1

The absorption costing net operating income for Helmers Corporation last year was $130,400, calculated by adding the fixed manufacturing overhead costs released from inventory ($35,400) to the variable costing net operating income ($95,000).

Step-by-step explanation:

The student's question relates to a comparison of net operating income under variable costing and absorption costing methods. To calculate the absorption costing net operating income for last year, we need to consider the variable costing net operating income and adjust it for the fixed manufacturing overhead costs that were released from inventory under absorption costing.

Here is the calculation:

• Variable costing net operating income last year: $95,000
• Fixed manufacturing overhead released from inventory: $35,400
• Absorption costing net operating income last year: variable costing NOI + released fixed overhead
• = $95,000 + $35,400
• = $130,400

Answer 2

$59,600

Step-by-step explanation:

Calculation for the absorption costing net operating income last year

Using this formula

Absorption costing net operating income last year=Variable costing net operating income last year -fixed manufacturing overhead costs last year

Let plug in the formula

Absorption costing net operating income last year=$95,000-$35,400

Absorption costing net operating income last year=$59,600

Therefore the absorption costing net operating income last year was $59,600