Answer:
a. Decreased by 7010 units
Explanation:
Variable costing net operating income$ 90,000
Add manufacturing overhead costs
deferred in inventory under absorption
costing ($125,750-$90,000) $35,750
Deduct fixed manufacturing overhead costs released from inventory under absorption costingAbsorption costing net operating income $125,750
Fixed manufacturing overhead per unit = $58,650 ÷ 11,500 units = $5.1 per unit
Manufacturing overhead deferred in (released from) inventory = Fixed manufacturing overhead in endinginventory − Fixed manufacturing overhead in beginning inventory$35,750= ($5.1 per unit × Units in ending inventory) − ($5.1 per unit × Units in beginning inventory)$35,750 = $5.1 per unit × (Units in ending inventory − Units in beginning inventory)(Units in ending inventory − Units in beginning inventory)
= $35,750÷ $5.1 per unit = 7,010 units
