Problems
The following information should be used to answer questions 1 and 2: Consider the following information for Narnia Co.
Selling price per unit $12.00
Variable manufacturing cost per unit $6.50
Variable selling and administrative cost per unit $1.25
Fixed selling and administrative expense $150,000
Beginning inventory last year 0 units
Production last year 240,000 units
1. Sales last year 233,500 units Production this year 200,000 units Sales this year 203,000 units Fixed manufacturing cost per unit last year $2.00 1. Given that fixed manufacturing overhead in total has not changed from last year, what is this year's net operating income using absorption costing?
a) $225,550
b) $228,150
c) $276,350
d) $306,750
2. Given that total fixed manufacturing overhead has not changed from last year, what is this year's net operating income using variable costing?
a) $226,050
b) $232,750
c) $252,250
d) $306,750.