Calculation of absorption costing net operating income

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?

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Calculation of net operating income under Absorption costing:

Particulars	Amount
Variable costing net operating income last year	$86,000
Less : Fixed manufacturing overhead cost released from inventory	(32,000)
Absorption costing net operating income last year	$54,000

Absorption costing net operating income for last year is $54,000.

Absorption costing net operating income last year = Variable costing net operating income last year - Fixed manufacturing overhead cost released from inventory

DEEPIKA GOYAL answered 2 years ago

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