Last year, Jaquet Corporation's variable costing net operating income was $58,000. The fixed manufacturing overhead costs...
Last year, Jaquet Corporation's variable costing net operating income was $58,000. The fixed manufacturing overhead costs deferred in inventory under absorption costing amounted to $9,000.
Required:
Determine the absorption costing net operating income last year. Show your work!
Homework Answers
Absorption costing includes the fixed manufacturing overhead in the ending inventory at the end of the period.
Variable costing includes the fixed manufacturing overhead in the period in which they are incurred.
Jaquet Corporation's variable costing net operating income was $58,000
Fixed manufacturing overhead costs deferred in inventory under absorption costing amounted to $9,000.
So, the absorption costing net operating income last year is 58,000+9,000= 67,000
To determine the absorption costing net operating income, we need to add the fixed manufacturing overhead costs deferred in inventory to the variable costing net operating income.
Absorption Costing Net Operating Income = Variable Costing Net Operating Income + Fixed Manufacturing Overhead Deferred in Inventory
Given data: Variable Costing Net Operating Income = $58,000 Fixed Manufacturing Overhead Deferred in Inventory = $9,000
Absorption Costing Net Operating Income = $58,000 + $9,000
Absorption Costing Net Operating Income = $67,000
Therefore, the absorption costing net operating income for last year was $67,000.
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