Moises Corporation manufactures a single product. Last year, the company's variable costing net operating income was $68,000 and ending inventory decreased by 900 units. Fixed manufacturing overhead cost per unit was $6 in both beginning and ending inventory. Required:Determine the absorption costing net operating income for last year.
What will be an ideal response?
Manufacturing overhead deferred in (released from) inventory = Fixed manufacturing overhead in ending inventory - Fixed manufacturing overhead in beginning inventory
= ($6 per unit × Units in ending inventory) - ($6 per unit × Units in beginning inventory)
= $6 per unit × (Units in ending inventory - Units in beginning inventory)
= $6 per unit × (-900 units)
= -$5,400
| Variable costing net operating income | $ | 68,000 | |
| Deduct fixed manufacturing overhead costs released from inventory under absorption costing | (5,400 | ) | |
| Absorption costing net operating income | $ | 62,600 | |
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