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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?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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less interest expense (from St A Expense Budget) Net Income Manufacturing budgets: Sales Budget Cash Collections Budget Production Budget how many units to produce in period Budgeted sales in units + Desired End Inventory Total needs, then Desired End inventony = 11% next month's budgeted sales Direct Materials Budget need required production for each period, then multiply by units of add desired ending inventory beginning inventory to de getermine total production needs 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? a. 17,667 b. 41,833 c. 38 10 d. 29 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?
Transcribed Image Text:less interest expense (from St A Expense Budget) Net Income Manufacturing budgets: Sales Budget Cash Collections Budget Production Budget how many units to produce in period Budgeted sales in units + Desired End Inventory Total needs, then Desired End inventony = 11% next month's budgeted sales Direct Materials Budget need required production for each period, then multiply by units of add desired ending inventory beginning inventory to de getermine total production needs 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? a. 17,667 b. 41,833 c. 38 10 d. 29 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?
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