Croft Corporation produces a single product. Last year, the company had a net operating income of $160,000 using absorption costing and $149,000 using variable costing. The fixed manufacturing overhead cost was $10 per unit. There were no beginning inventories. If 43,000 units were produced last year, then sales last year were: Multiple Choice

32,000 units

40,000 units

41,900 units

4,000 units

Question

Brianna Dawson

Business

3 February, 15:58

Croft Corporation produces a single product. Last year, the company had a net operating income of $160,000 using absorption costing and $149,000 using variable costing. The fixed manufacturing overhead cost was $10 per unit. There were no beginning inventories. If 43,000 units were produced last year, then sales last year were: Multiple Choice

32,000 units

40,000 units

41,900 units

4,000 units

+4

Answers (1)

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Dominik Brennan · Answer 1

Sales last year were 41,900 units

Explanation:

Croft Corporation

Net operating income (absorption costing) $160,000

Net operating income variable costing $149,000

Difference $ 11000

This difference is the amount of the fixed costs of the ending inventories which are included in the absorption costing and excluded from the variable costing income statement.

Fixed manufacturing overhead cost $10 per unit

No of units in the ending inventory = Total Fixed cost / Fixed Cost per unit

= $ 11000/10=1100

Sales = Production Units Less Ending Inventory Units

Sales = 43000 - 1100 = 41900 units