Helmers Corporation Manufactures a Single Product

question 245

Multiple Choice

Helmers Corporation manufactures a single product. Variable costing net operating income last year was $86,000 and this year was $103,000. Last year, $32,000 in fixed manufacturing overhead costs were released from inventory under absorption costing. This year, $12,000 in fixed manufacturing overhead costs were deferred in inventory under absorption costing.
-What was the absorption costing net operating income last year?

• A) $106,000
• B) $86,000
• C) $54,000
• D) $118,000

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Definitions:

Advertising Cost

The expense incurred by an entity to promote its products, services, or brand through various media channels.

Production Equipment

Machinery and tools used in the manufacturing process to produce finished goods.

Factory Supervisor

A role responsible for overseeing the operation of a manufacturing facility, including managing employees and ensuring production targets are met.

Manufacturing Overhead

All indirect costs associated with the production process, including but not limited to salaries and utilities.