Question

Croft Corporation produces a single product. Last year, the company had a net operating income of $89,000 using absorption costing and $74,600 using variable costing. The fixed manufacturing overhead cost was $12 per unit. There were no beginning inventories. If 22,400 units were produced last year, then sales last year were:a. 7,780 unitsb. 27,670 unitsc. 50,620 unitsd. 30,730 units

Answer 1

Answer:

21,200 units

Explanation:

For determining the sales, first we have to compute the net operating income difference which is shown below:

= Net operating income under absorption costing - Net operating income under variable costing

= $89,000 - $74,600

= $14,400

Now the inventory units increased by

= $14,400 ÷ 12 per unit

= 1,200 units

And, the production units are 22,400

So, the sales would be

= 22,400 units - 1,200 units

= 21,200 units

This is the answer and the same is not provided in the given options