Scenic Company had 11,500 units in its ending inventory on December 31, 2019. During 2019, the company's variable production costs were $8 per unit and its fixed manufacturing overhead rate was $5 per unit. If the company's operating income for 2019 was $13,000 lower under variable costing than it was under absorption costing, how many units were in beginning inventory on January 1, 2019? (Assume the company uses normal costing) a. 14,100 units b. 13,125 units c. 9,875 units d. 14,000 units e. 10,500 units f. 8,900 units g. 12,500 units h. None of the above

Scenic Company had 11,500 units in its ending inventory on December 31, 2019. During 2019, the company's variable production costs were $8 per unit and its fixed manufacturing overhead rate was $5 per unit. If the company's operating income for 2019 was $13,000 lower under variable costing than it was under absorption costing, how many units were in beginning inventory on January 1, 2019? (Assume the company uses normal costing) a. 14,100 units b. 13,125 units c. 9,875 units d. 14,000 units e. 10,500 units f. 8,900 units g. 12,500 units h. None of the above

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Description: Scenic Company had 11,500 units in its ending inventory on December 31,2019. During 2019, the company's variable production costs were $8 per unit and itsfixed manufacturing overhead rate was $5 per unit. If the company's operatingincome for 2019 wa

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Chapter1: Financial Statements And Business Decisions

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Concept explainers

Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.

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Question

Scenic Company had 11,500 units in its ending inventory on December 31,
2019. During 2019, the company's variable production costs were $8 per unit and its
fixed manufacturing overhead rate was $5 per unit. If the company's operating
income for 2019 was $13,000 lower under variable costing than it was under
absorption costing, how many units were in beginning inventory on January 1, 2019?
(Assume the company uses normal costing)
a. 14,100 units
b. 13,125 units
с. 9,875 units
d. 14,000 units
e. 10,500 units
f. 8,900 units
g. 12,500 units
h. None of the above

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