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21 May, 20:59

Croft Corporation produces a single product. Last year, the company had a net operating income of $89,000 using absorption costing and $74,600 using variable costing. The fixed manufacturing overhead cost was $12 per unit. There were no beginning inventories. If 22,400 units were produced last year, then sales last year were:a. 7,780 unitsb. 27,670 unitsc. 50,620 unitsd. 30,730 units

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  1. 21 May, 21:20
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    21,200 units

    Explanation:

    For determining the sales, first we have to compute the net operating income difference which is shown below:

    = Net operating income under absorption costing - Net operating income under variable costing

    = $89,000 - $74,600

    = $14,400

    Now the inventory units increased by

    = $14,400 : 12 per unit

    = 1,200 units

    And, the production units are 22,400

    So, the sales would be

    = 22,400 units - 1,200 units

    = 21,200 units

    This is the answer and the same is not provided in the given options
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