The level of inventory of a manufactured product has increased by 7,000 units du

Question

The level of inventory of a manufactured product has increased by 7,000 units during a period. The following data are also available:

Variable Fixed Unit manufacturing costs of the period $12.00 $6.00 Unit operating expenses of the period   4.00 1.50
What would be the effect on income from operations if absorption costing is used rather than variable costing? Answer a. $52,500 increase b. $42,000 increase c. $52,500 decrease d. $42,000 decrease The level of inventory of a manufactured product has increased by 7,000 units during a period. The following data are also available:

Variable Fixed Unit manufacturing costs of the period $12.00 $6.00 Unit operating expenses of the period   4.00 1.50
What would be the effect on income from operations if absorption costing is used rather than variable costing? Variable Fixed $12.00 $6.00   4.00 1.50 $52,500 increase $42,000 increase $52,500 decrease $42,000 decrease Variable Fixed Unit manufacturing costs of the period $12.00 $6.00 Unit operating expenses of the period   4.00 1.50

Explanation / Answer

b.

$42,000 increase

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