Asked by
Katherine Marie
on Dec 17, 2024
Verified
Last year, Tinklenberg Corporation's variable costing net operating income was $52,400 and its inventory decreased by 1,400 units. Fixed manufacturing overhead cost was $8 per unit for both units in beginning and in ending inventory. What was the absorption costing net operating income last year?
A) $41,200
B) $11,200
C) $63,600
D) $52,400
Variable Costing
A costing method that includes only variable manufacturing costs—direct materials, direct labor, and variable manufacturing overhead—in the cost of goods sold, treating fixed manufacturing overhead as a period cost.
Fixed Manufacturing Overhead
The manufacturing costs that do not change with the level of production, such as rent, salaries, and insurance.
- Comprehend the principles of absorption costing in comparison with variable costing and their effects on net operating income.
- Determine the net operating income using both absorption and variable costing methods.
- Determine the impact of inventory level fluctuations on net operating income when using absorption costing.
Verified Answer
SE
Learning Objectives
- Comprehend the principles of absorption costing in comparison with variable costing and their effects on net operating income.
- Determine the net operating income using both absorption and variable costing methods.
- Determine the impact of inventory level fluctuations on net operating income when using absorption costing.