Question

Helmers Corporation manufactures a single product. Variable costing net operating income last year was $71,000 and this year was $85,100. Last year, $26,400 in fixed manufacturing overhead costs were released from inventory under absorption costing. This year, $9,900 in fixed manufacturing overhead costs were deferred in inventory under absorption costing. What was the absorption costing net operating income last year?

Answer 1

Answer:

net income under absorption costing = $44,600

Explanation:

given data

net operating income last year  = $71,000

net operating income this year = $85,100

fixed manufacturing overhead costs last year = $26,400

fixed manufacturing overhead costs this year = $9,900

to find out

absorption costing net operating income last year

solution

we find here income under absorption costing that is

as we know that net income under variable costing = $71,000  

so Fixed overhead deferred in ending inventory is 0  

and Fixed overhead released in beginning inventory is = $26,400  

so here net income under absorption costing is

net income under absorption costing = net income under variable costing - Fixed overhead released in beginning inventory

net income under absorption costing = $71,000 - $26,400

net income under absorption costing = $44,600