QUESTION 4 (a) Absorption costing net operating income for last for last year: Variable costing net operating income (last year) + Fixed Overhead cost in increase in ending inventory, last year. 82700+(900 x 2) = P84,500 (b) absorption costing net operating income for (this year) = Variable costing net operating income, this year - Fixed Overhead cost in Decrease in ending inventory, this year 87800 (3100 x 2) = P81,600