Badlands,Inc.reports the following information for the year ended December 31:

The operating income calculated using variable costing and absorption costing amounted to $10,000 and $13,300,respectively.There were no beginning inventories.Determine the total number of units produced during the year.
A)590 units
B)722 units
C)26 units
D)132 units

Question

Badlands,Inc.reports the following information for the year ended December 31:

The operating income calculated using variable costing and absorption costing amounted to $10,000 and $13,300,respectively.There were no beginning inventories.Determine the total number of units produced during the year.
A)590 units 
B)722 units 
C)26 units 
D)132 units

Quizplus · Accepted Answer

B)Number of units in the ending Finished Goods Inventory = (Profit using absorption costing - Profit using variable costing)/ Fixed manufacturing overhead per unit =
($13,300 - $10,000)/ $25 per unit = 132 units
Number of units produced = Units sold + Ending Inventory - Beginning Inventory
Number of units produced = 590 units + 132 units - 0 = 722 units