Lee Company produces a single product. At the end of last year, the company had

Question

Lee Company produces a single product. At the end of last year, the company had 30,000 units
in its ending inventory. Lee's variable production costs are $10 per unit and its fixed
manufacturing overhead costs are $5 per unit every year. The company's net operating income
for the year was $12,000 higher under variable costing than under absorption costing. Given
these facts, the number of units of product in inventory at the beginning of the year must have
been:
A. 28,800 units
B. 27,600 units
C. 32,400 units
D. 42,000 units

Explanation / Answer

B. 27,600 units

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