A Company That Produces a Single Product Had a Net

Multiple Choice

A company that produces a single product had a net operating income of $75,000 using variable costing and a net operating income of $95,000 using absorption costing. Total fixed manufacturing overhead was $50,000 and production was 10,000 units both this year and last year. Last year was the first year of operations. Between the beginning and the end of the year, the inventory level:

A) decreased by 20,000 units
B) increased by 20,000 units
C) decreased by 4,000 units
D) increased by 4,000 units