Assume the following information for a company that produced 10,000 units and sold 9,000 units during its first year of operations: Selling price Direct materials Direct labor Variable manufacturing overhead Sales commission Fixed manufacturing overhead Per Unit $ 200 $ 72 $ 50 $ 10 $8 Multiple Choice $ 287,000 Which of the following choices explains the relationship between the absorption costing net operating income and the variable costing net operating income? The absorption costing net operating income will be lower than the variable costing net operating income by $28,700. The absorption costing net operating income will be lower than the variable costing net operating income by $100,700. Per Year The absorption costing net operating income will be higher than the variable costing net operating income by $28,700.

Assume the following information for a company that produced 10,000 units and sold 9,000 units during its first year of operations: Selling price Direct materials Direct labor Variable manufacturing overhead Sales commission Fixed manufacturing overhead Per Unit $ 200 $ 72 $ 50 $ 10 $8 Multiple Choice $ 287,000 Which of the following choices explains the relationship between the absorption costing net operating income and the variable costing net operating income? The absorption costing net operating income will be lower than the variable costing net operating income by $28,700. The absorption costing net operating income will be lower than the variable costing net operating income by $100,700. Per Year The absorption costing net operating income will be higher than the variable costing net operating income by $28,700.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Concept explainers

Inventory Accounting

Inventory accounting is that branch of accounting that helps in determining the specific value of assets at different stages of production and development.

Question

Assume the following information for a company that produced 10,000 units
and sold 9,000 units during its first year of operations:
Selling price
Direct materials
Direct labor
Variable manufacturing overhead
Sales commission
Fixed manufacturing overhead
Per Unit
$ 200
$ 72
$ 50
$ 10
$8
Multiple Choice
$ 287,000
Which of the following choices explains the relationship between the
absorption costing net operating income and the variable costing net operating
income?
The absorption costing net operating income will be
lower than the variable costing net operating income by
$28,700.
The absorption costing net operating income will be
lower than the variable costing net operating income by
$100,700.
Per Year
The absorption costing net operating income will be
higher than the variable costing net operating income
by $28,700.

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