Craft Company produces a single product. Last year, the company had a net operat
ID: 2378600 • Letter: C
Question
Craft Company produces a single product. Last year, the company had a net operating income of $97,620 using absorption costing and $76,200 using variable costing. The fixed manufacturing overhead cost was $14 per unit. There were no beginning inventories. If 29,200 units were produced last year, then sales last year were:
Craft Company produces a single product. Last year, the company had a net operating income of $97,620 using absorption costing and $76,200 using variable costing. The fixed manufacturing overhead cost was $14 per unit. There were no beginning inventories. If 29,200 units were produced last year, then sales last year were:
Explanation / Answer
Hi,
Please find the answer as follows:
Difference in Net Operating Income = 97620 - 76200 = 21420
Increase in Units in Inventory = 21420/14 = 1530
Sales = 29200 - 1530 = 27670 (since there are no beginning inventories)
Answer is 27670
Thanks.