Question

Bellue Inc. manufactures a single product. Variable costing net operating income was $77,000 last year and its inventory decreased by 2,100 units. Fixed manufacturing overhead cost was $4 per unit for both units in beginning and in ending inventory. What was the absorption costing net operating income last year? Garrison 16e Rechecks 2018-06-22 Multiple Choice $77,000 $8,400 $79,100 $68,600

Answer 1

$68,600

Step-by-step explanation:

Bellue Inc.

Manufacturing overhead deferred in (released from) inventory = Fixed manufacturing overhead in ending inventory − Fixed manufacturing overhead in beginning inventory

= ($4 per unit × Units in ending inventory) − ($4per unit × Units in beginning inventory)

= $4 per unit × (Units in ending inventory − Units in beginning inventory)

= $4 per unit ×-2,100 = −$8,100

Variable costing net operating income$77,000

Deduct fixed manufacturing overhead costs released from inventoryunder absorption costing ($8,400)

Absorption costing net operating income $68,600

Therefore the absorption costing net operating income last year is $68,600