Helmers Corporation manufactures a single product. Variable costing net operating income last year was $86,000 and this year was $103,000. Last year, $32,000 in fixed manufacturing overhead costs were released from inventory under absorption costing. This year, $12,000 in fixed manufacturing overhead costs were deferred in inventory under absorption costing.What was the absorption costing net operating income this year?
A) $81,000
B) $83,000
C) $115,000
D) $123,000

Question

Quizplus · Accepted Answer

To find the absorption costing net operating income, we need to add the deferred fixed manufacturing overhead costs to the variable costing net operating income.

Absorption Costing Net Operating Income = Variable Costing Net Operating Income + (Fixed Manufacturing Overhead Deferred in Inventory - Fixed Manufacturing Overhead Released from Inventory)
Absorption Costing Net Operating Income = $103,000 + ($12,000 - $32,000)
Absorption Costing Net Operating Income = $83,000

Therefore, the correct answer is C) $115,000

Helmers Corporation Manufactures a Single Product