At the end of last year, Lee Company had 40,000 units in its ending inventory. Every year, Lee Company's variable production costs are $10 per unit, and its fixed manufacturing overhead costs are $6 per unit. The company's operating income for the year was $11,000 higher under variable costing than under absorption costing. Given these facts, what must have been the number of units of product in inventory at the beginning of the year?

At the end of last year, Lee Company had 40,000 units in its ending inventory. Every year, Lee Company's variable production costs are $10 per unit, and its fixed manufacturing overhead costs are $6 per unit. The company's operating income for the year was $11,000 higher under variable costing than under absorption costing. Given these facts, what must have been the number of units of product in inventory at the beginning of the year?

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter8: Budgeting For Planning And Control

Section: Chapter Questions

Problem 6CE: Play-Disc makes Frisbee-type plastic discs. Each 12-inch diameter plastic disc has the following...

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