chapter 5 cost behavior 403910

(Appendix 5A) Pungent Corporation manufactures and sells a spice rack. Shown below are the actual operating results for the first two years of operations:

Year 1 Year 2

Units (spice racks) produced 40,000 40,000
Units (spice racks)sold 37,000 41,000
Absorption costing net
operating income $44,000 $52,000
Variable costing net
operating income $38,000 ????

Pungent’s cost structure and selling price were the same for both years. What is Pungent’s variable costing net operating income for Year 2? Answer