Abbey, Brady, and Cali Companies Three new companies (Abbey, Brady, and Cali) began operations on January 1 of the current year. Consider the following operating costs that were incurred by these companies during the complete calendar year: Abbey Company Brady Company Cali Company Production in units 10,000 10,000 10,000 Sales price per unit $10 $10 $10 Fixed production costs $10,000 $20,000 $30,000 Variable production costs $30,000 $20,000 $10,000 Variable SG&A $1/unit $2/unit $3/unit Fixed SG&A $30,000 $20,000 $10,000 Refer to Abbey, Brady, and Cali Companies. Based on sales of 10,000 units, which company will report the greater income before income taxes if variable costing is used? Select one: a. All of the companies will report the same income before income taxes. b. Abbey Company c. Brady Company d. Cali Company
Abbey, Brady, and Cali Companies Three new companies (Abbey, Brady, and Cali) began operations on January 1 of the current year. Consider the following operating costs that were incurred by these companies during the complete calendar year: Abbey Company Brady Company Cali Company Production in units 10,000 10,000 10,000 Sales price per unit $10 $10 $10 Fixed production costs $10,000 $20,000 $30,000 Variable production costs $30,000 $20,000 $10,000 Variable SG&A $1/unit $2/unit $3/unit Fixed SG&A $30,000 $20,000 $10,000 Refer to Abbey, Brady, and Cali Companies. Based on sales of 10,000 units, which company will report the greater income before income taxes if variable costing is used? Select one: a. All of the companies will report the same income before income taxes. b. Abbey Company c. Brady Company d. Cali Company
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Abbey, Brady, and Cali Companies
Three new companies (Abbey, Brady, and Cali) began operations on January 1 of the current year. Consider the following operating costs that were incurred by these companies during the complete calendar year:
| Abbey Company | Brady Company | Cali Company | |
|---|---|---|---|
| Production in units | 10,000 | 10,000 | 10,000 |
| Sales price per unit | $10 | $10 | $10 |
| Fixed production costs | $10,000 | $20,000 | $30,000 |
| Variable production costs | $30,000 | $20,000 | $10,000 |
| Variable SG&A | $1/unit | $2/unit | $3/unit |
| Fixed SG&A | $30,000 | $20,000 | $10,000 |
Refer to Abbey, Brady, and Cali Companies. Based on sales of 10,000 units, which company will report the greater income before income taxes if variable costing is used?
Select one:
a. All of the companies will report the same income before income taxes.
b. Abbey Company
c. Brady Company
d. Cali Company
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