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Bellue Inc. manufactures a single product. Variable costing net operating income was $98,200 last year and its inventory decreased by 2,100 units. Fixed manufacturing overhead cost was $1 per unit for both units in beginning and in ending inventory. What was the absorption costing net operating income last year?

Multiple Choice

$2,100

$96,100

$98,200

$100,300

Respuesta :

Answer:

$96,100

Explanation:

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

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

= $98,200 - $1 Ă— 2,100 units

= $98,200 - $2,100

= $96,100

We simply deduct the fixed manufacturing overhead cost from the variable cost so that the net operating income would come.

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