Solution Library

Calculate Change In Net Operating Income

Question

Eagle Corporation manufactures a picnic table. Shown below is Eagle's cost structure:

 

Variable cost
per table

Total fixed cost
for the year

Manufacturing cost

$82

$200,260

Selling and administrative

$15

$34,162

In its first year of operations, Eagle produced and sold 11,780 tables. The tables sold for $173 each. How would Eagle's absorption costing net operating income be affected in its first year if 14,240 tables were produced instead of 11,780 and Eagle still sold 11,780 tables?

a. net operating income would have been $39,133 higher

b. net operating income would have been $123,633 lower

c. net operating income would have been $34,633 higher

d. net operating income would not have been affected

 

Summary

The question belongs to Accounting and it discusses about calculation of change in net operating income.

Total Word Count 68

 

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