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The Manaka Company had the data for its first three years of operation regarding its only product: Year 1 Year 2 Year 3 Total Units
The Manaka Company had the data for its first three years of operation regarding its only product: Year 1 Year 2 Year 3 Total Units Produced 40,000 50,000 30,000 120,000 Units Sold 40,000 40,000 40,000 120,000 Unit Selling Price $30 $30 $30 Unit Variable Manufacturing costs $5 $5 $5 Fixed Manufacturing Overhead costs $600,000 $600,000 $600,000 Unit Variable selling and adnlin costs $2 $2 $2 Total Selling and admin costs $300,000 $300,000 $300,000 Absorption Costing Operating Income $100,000 $220,000 ? Required: a. Using the data above, explain concisely why the operating income for Year 2 under absorption costing was higher than the operating income for Year 1, although the same number of-units we sold in each year
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