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MC Qu. 135 Front Company had net income of... Front Company had net income of $86,500 based on variable costing. Beginning and ending inventories were 2,200 units and 4,000 units, respectively. Assume the fixed overhead per unit was $8.60 for both the beginning and ending inventory. What is net income under absorption costing

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Answer:

Net income under absorption costing = $101980

Explanation:

Below is the following calculation:

Net income based on variable costing = $86500

Rise in inventory = (4000 - 2200) x 8.60 = $15480

Now find the net income under absorption costing by adding the rise in inventory in the net income based on variable costing.

Net income under absorption costing = $86500 + $15480

Net income under absorption costing = $101980