The net operating income (loss) under absorption costing in Year 2 is closest to:

A) $146,000
B) $118,000
C) $47,000
D) $41,000

Absorption Costing

A method in accounting that adds all the manufacturing-related expenses like direct materials, direct labor, and all types of overhead (both variable and fixed) to the cost of a product.

Net Operating Income

Profit generated from a company's core business operations, excluding costs and income from non-operational activities.

Operating Loss

A situation where a business's total expenses exceed its revenues, not accounting for interest or taxes.