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Lemur [1.5K]
3 years ago
10

Last year, Tinklenberg Corporation's variable costing net operating income was $52,400 and its inventory decreased by 1,400 unit

s. Fixed manufacturing overhead cost was $8 per unit for both units in beginning and in ending inventory. What was the absorption costing net operating income last year?
a. $11,200
b. $63,600
c. $52,400
d. $41,200
Business
1 answer:
mihalych1998 [28]3 years ago
8 0

Answer:

The correct option is D,$41,200

Explanation:

The fact that inventory reduced by 1,400 units implies that the  fixed costs of 1,400 units added to closing inventory under absorption costing method has now been released into income statement as an additional cost in the current year,as result profit under absorption costing method reduce by the increased fixed costs:

net operating income under variable costing   $52,400

less:additional fixed costs (1,400*$8)                  ($11,200)

Profit under absorption costing method              $41,200

The correct option is D,$41,200

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The correct answer is: enter the market; exit the market.

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Because of this, the firms in competitive settings are motivated to produce at a low cost and they come up with new ideas to please customers so that they earn a profit.

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