[10 points]. In 2019, Jens Company made and sold 10,000,000 units of its single product at...

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[10 points]. In 2019, Jens Company made and sold 10,000,000 units of its single product at the price of $6 per unit. Variable manufacturing cost per unit was $3; total fixed manufacturing cost was $30,000,000; and selling and administrative expenses (all fixed) were $8,000,000. The company uses GAAP absorption costing, with units as the allocation base for overhead. In early 2020, Jens Company's board of directors reviewed 2019 financial results. These results were highly disappointing. The board replaced the company's CEO and agreed to pay the new CEO a significant bonus, equal to 10% of net operating income (before the deduction for the bonus). The new CEO increased annual production to 20,000,000 units, but sales remained at 10,000,000 units. Fixed costs in 2020 were the same as in 2019. 1) What was the company's net operating income (NOI) in 2020? 2) The new CEO is celebrating the increase in NOI between 2019 and 2020. By how much has NOI increased? Why did it increase even though unit sales were the same in 2020 and 2019? 3) What was the company's 2020 ending inventory value? 4) If the company used variable costing, what would have been the company's 2020 ending inventory value? [10 points]. In 2019, Jens Company made and sold 10,000,000 units of its single product at the price of $6 per unit. Variable manufacturing cost per unit was $3; total fixed manufacturing cost was $30,000,000; and selling and administrative expenses (all fixed) were $8,000,000. The company uses GAAP absorption costing, with units as the allocation base for overhead. In early 2020, Jens Company's board of directors reviewed 2019 financial results. These results were highly disappointing. The board replaced the company's CEO and agreed to pay the new CEO a significant bonus, equal to 10% of net operating income (before the deduction for the bonus). The new CEO increased annual production to 20,000,000 units, but sales remained at 10,000,000 units. Fixed costs in 2020 were the same as in 2019. 1) What was the company's net operating income (NOI) in 2020? 2) The new CEO is celebrating the increase in NOI between 2019 and 2020. By how much has NOI increased? Why did it increase even though unit sales were the same in 2020 and 2019? 3) What was the company's 2020 ending inventory value? 4) If the company used variable costing, what would have been the company's 2020 ending inventory value?

Answer rating: 100% (QA)

Working notes Absorption costing unit product cost Variabl... View the full answer