Routsong Company had the following sales and production data for the past four years: Year 1 Year 2 Year 3 Year 4 Production in units 6,000 9,000 4,000 5,000 Sales in units 6,000 6,000 5,000 7,000 Selling price per unit, direct material per unit, direct labor per unit, variable overhead cost per unit, and fixed overhead cost are the same in each year. Ignoring the selling and administrative costs, which of the following statements is not correct? A. Under variable costing, net operating income for Year 1 and Year 2 would be the same. B. Because of the changes in production levels, under variable costing the unit product cost will change each year. C. The total net operating income for all four years combined would be the same under variable and absorption costing. D. Under absorption costing, the net operating income in Year 1 would be less than the net operating income in Year 2.

Routsong Company had the following sales and production data for the past four years: Year 1 Year 2 Year 3 Year 4 Production in units 6,000 9,000 4,000 5,000 Sales in units 6,000 6,000 5,000 7,000 Selling price per unit, direct material per unit, direct labor per unit, variable overhead cost per unit, and fixed overhead cost are the same in each year. Ignoring the selling and administrative costs, which of the following statements is not correct? A. Under variable costing, net operating income for Year 1 and Year 2 would be the same. B. Because of the changes in production levels, under variable costing the unit product cost will change each year. C. The total net operating income for all four years combined would be the same under variable and absorption costing. D. Under absorption costing, the net operating income in Year 1 would be less than the net operating income in Year 2.

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter2: Basic Managerial Accounting Concepts

Section: Chapter Questions

Problem 39E: Cost Classification Loring Company incurred the following costs last year: Required: 1. Classify...

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