Asked by
Sabrina Krohn
on Oct 11, 2024
Verified
Bellue Inc.manufactures a single product.Variable costing net operating income was $96,300 last year and its inventory decreased by 2,600 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?
A) $2,600
B) $93,700
C) $96,300
D) $98,900
Variable Costing
An accounting method that includes only variable production costs—direct materials, direct labor, and variable manufacturing overhead—in product costs.
Fixed Manufacturing Overhead
The portion of manufacturing costs that do not vary with the level of production, such as salaries of supervisors and rent for factory buildings.
- Acquire knowledge on the differences between absorption costing and variable costing, and how they affect net operating income.
- Comprehend how adjustments in stock quantities influence net operating income when applying absorption and variable costing methods.
- Gain an understanding of and determine the influence of fixed production overheads on net operating profitability.
Verified Answer
PN
Learning Objectives
- Acquire knowledge on the differences between absorption costing and variable costing, and how they affect net operating income.
- Comprehend how adjustments in stock quantities influence net operating income when applying absorption and variable costing methods.
- Gain an understanding of and determine the influence of fixed production overheads on net operating profitability.
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