The Income of a Company for a Year on a Variable

question 54

Multiple Choice

The income of a company for a year on a variable costing basis is $85 000 and on an absorption costing basis is $73 000. Fixed costs per unit were the same in both the prior and current year ($1.20 per unit) . What was the change in inventory over the year?

• A) Decrease of 10 000 units
• B) Increase of 10 000 units
• C) Increase of 12 000 units
• D) None of the given answers

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