Schubert Corporation manufactures a variety of products. Variable costing net operating income last year was $59,000 and this year was $70,000. Last year, $31,000 in fixed manufacturing overhead costs were released from inventory under absorption costing. This year, $22,000 in fixed manufacturing overhead costs were deferred in inventory under absorption costing.
-What was the absorption costing net operating income this year?
A) $92,000
B) $58,000
C) $79,000
D) $61,000

Question

Quizplus · Accepted Answer

The absorption costing net operating income is calculated by adjusting the variable costing net operating income for the change in fixed manufacturing overhead costs deferred or released. This year, $22,000 was deferred, so add this to the variable costing net operating income of $70,000, resulting in $92,000.

Schubert Corporation Manufactures a Variety of Products