What is variable costing net operating income in year two

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Reference no: EM131216005

Two years ago, we started a company to manufacture and sell small sail boats. Below are our selected actual operating results for the first two years of operations (cost structures and selling are the same for year 1 and year 2).

Year 1 Year 2

Units produced 40,000 40,000

Units sold 37,000 41,500

Absorption Costing NOI $77,500 ??

Variable costing NOI $71,500 ??

Fixed S&A expenses $15,000 $15,000

What is the variable costing net operating income in year 2?

A. $87,250

B. $83,500

C. $89,500

D. $91,750

E. $86,800

Please show work

Reference no: EM131216005

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