The level of inventory of a manufactured product has increased by 4,000 units during a period. The following data are also available:
Variable
Fixed
Unit manufacturing costs of the period$22.00
$11.00
Unit operating expenses of the period 7.00
5.00
?
The effect on operating income if absorption costing is used rather than variable costing would be a
A. $44,000 decrease
B. $44,000 increase
C. $64,000 increase
D. $64,000 decrease
Answer: B
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