Question

TB MC Qu. 7-69 Bellue Inc. manufactures a single product. Variable costing ... Bellue Inc. manufactures a single product. Variable costing net operating income was $81,900 last year and its inventory decreased by 2,800 units. Fixed manufacturing overhead cost was $3 per unit for both units in beginning and in ending inventory. What was the absorption costing net operating income last year?

Answer 1

Answer:

$73,500

Explanation:

The computation of the absorption costing net operating income last year is shown below:

= Variable costing net operating income - inventory units × Fixed manufacturing overhead cost per unit

= $81,900 - 2,800 units × $3

= $81,900 - $8,400

= $73,500

We simply deduct the fixed manufacturing overhead cost from the variable costing net operating income to find out the absorption costing net operating income