Last year, Gransky Corporation's variable costing net operating income was $52,100 and its ending inventory increased by 400 units. Fixed manufacturing overhead cost was $7 per unit. What was the absorption costing net operating income last year?
A) $52,100
B) $2,800
C) $54,900
D) $49,300

Question

Quizplus · Accepted Answer

To calculate the absorption costing net operating income, we need to add the fixed manufacturing overhead cost per unit ($7) to the variable cost per unit and then multiply it by the number of units produced (which is equal to the number of units sold plus the increase in ending inventory). Using this formula, we get:

Absorption costing net operating income = (Variable cost per unit + Fixed manufacturing overhead cost per unit) * (Number of units sold + Increase in ending inventory)
Absorption costing net operating income = ($52,100 + (400 * $7)) = $54,900

Therefore, the correct answer is C.

Last Year, Gransky Corporation's Variable Costing Net Operating Income Was