A company that produces a single product had a net operating income of $80,000 u

Question

A company that produces a single product had a net operating income of $80,000 using variable costing and a net operating income of $104,750 using absorption costing. Total fixed manufacturing overhead was $53,550 and production was 10,500 units both this year and last year. Last year was the first year of operations. Between the beginning and the end of the year, the inventory level: (Do not round intermediate computation and round your final answer to nearest whole number.) increased by 4,853 units decreased by 4,853 units increased by 24,750 units decreased by 24.750 units

Explanation / Answer

Answer: Increasefd by 4853 units

Fixed manufacturing overhead per unit=53550/10500=$5.1

Difference between NOI under both methods=(104750-80000)/$5.1=4853 units

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