73

The level of inventory of a manufactured product has increased by 7,847 units during a period. The following data are also available:

	Variable	Fixed
Unit manufacturing costs of the period	$13	$7
Unit operating expenses of the period	$2	$3

What would be the effect on income from operations if variable costing is used rather than absorption costing?

a.$54,929 decrease

b.$78,470 decrease

c.$78,470 increase

d.$54,929 increase

72-

The level of inventory of a manufactured product has increased by 8,505 units during a period. The following data are also available:

	Variable	Fixed
Unit manufacturing costs of the period	$14	$6
Unit operating expenses of the period	$4	$5

What would be the effect on income from operations if absorption costing is used rather than variable costing?

a.$51,030 increase

b.$51,030 decrease

c.$93,555 decrease

d.$93,555 increase