Question: I need detailed help with steps on how to solve this. The answer is B, but I don't understand it. Please expalin where all the
I need detailed help with steps on how to solve this. The answer is B, but I don't understand it. Please expalin where all the numbers come from and make sure to show the steps of getting the FMOH. Thank you in advance!
Two years ago, Louise Wilow started a company to manufacture and sell cell phone accessories. Below are her selected actual operating results for the first two years of operations (her cost structure and selling prices were the same in year 1 and year 2). She allocates her fixed manufacturing overhead costs to the number of units produced in each year.
|
| Year 1 | Year 2 |
| Units produced | 45,000 | 45,000 |
| Units sold | 42,000 | 46,000 |
| Absorption costing net operating income | ?? | ?? |
| Variable costing net operating income | $ 63,000 | $ 79,000 |
| Fixed selling & admin. Expense | $ 15,000 | $ 15,000 |
Q. What was the absorption costing net operating income in year 1?
A. $ 79,000
B. $ 69,000
C. $ 77, 000
D. $ 90, 000
E. None of the above
I'll rate you 5 stars whoever gets it right and explains it well.
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts