Atlantic company produces a single product. for the most recent year, the company's net operating income computed by the absorption costing method was $7,400, and its net operating income computed by the variable costing method was $10,100. the company's unit product cost was $17 under variable costing and $22 under absorption costing. if the ending inventory consisted of 1,460 units, the beginning inventory must have been:

The answer is 2,000 units.

Explanation:

Manufacturing overhead allocated to one unit = Unit cost under absorption costing - Unit cost under variable costing = 22 - 17 = $5;

We have:

Operating income using variable costing - Manufacturing overhead released from inventory + Manufacturing overhead deferred in inventory = Operating income using absorption costing <=> 10,100 - 7,400 = Manufacturing overhead released from inventory - Manufacturing overhead deferred in inventory <=> 2,700 = 5 x (Units in opening inventory − Units in closing inventory) <=> Units in opening inventory − Units in beginning inventory = 540

=> Units in the beginning = 1,460 + 540 = 2,000 units.

in 2001, dell computer became the world’s largest personal computer vendor, continuing to

gain market share and post profits in an industry struggling with slumping sales and billions of

dollars in losses. dell sells 90% of its pcs directly to the final customer, largely bypassing the

reseller channel that accounts for most of the world’s pc sales. this direct customer relationship

is the key to dell’s business model, and provides distinct advantages over the indirect sales

model. dell’s direct relationship with the customer allows it to tailor its offerings to customer

needs, offer add-on products and services, and use the internet to offer a variety of customer

services. in addition, dell’s pcs are built to customers’ specifications upon receipt of an order,

giving dell additional advantages over indirect pc vendors who must try to forecast demand and

ship products based on those forecasts. dell’s direct sales and build-to-order model has achieved

superior performance in the pc industry in terms of inventory turnover, reduced overhead, cash

conversion, and return on investment (kraemer, et al., 2000).

explanation: