Question: I need detailed help with steps on how to solve. The answer is B, but I don't understand it. Thank you in advance! Two years
I need detailed help with steps on how to solve. The answer is B, but I don't understand it. 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 & year 2?
A. $ 79,000
B. $ 69,000
C. $ 77, 000
D. $ 90, 000
E. None of the above
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