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The level of inventory of a manufactured product has increased by 8,401 units during a period....

The level of inventory of a manufactured product has increased by 8,401 units during a period. The following data are also available: Variable Fixed Unit manufacturing costs of the period $14 $5 Unit operating expenses of the period $4 $3 What would be the effect on income from operations if absorption costing is used rather than variable costing?

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Answer #1
Fixed manufacturing cost per unit = $                     5
Level of production increased by = 8401 units
Difference in Net Income if Absorption costing is used rather than Variable costing = 8401 units X $5
Net Income Increase by = $           42,005
Therefore, Impact on Net Income = $42,005 Increased

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