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S&P Enterprises sold 10,000 units of inventory during a given period. The level of inventory of the manufactured product remained unchanged. The manufacturing costs were as follows: Variable Fixed Unit manufacturing costs of the period $ 11.00 $ 7.00 Unit operating expenses of the period 3.00 2.50 Which of the following statements is true? a. Net income under absorption costing will be $40,000 more than under variable costing. b. Net income will be the same under both variable and absorption costing. c. Net income under variable costing will be $45,000 less than net income under absorption costing. d. The difference in net income cannot be determined.

S&P Enterprises sold 10,000 units of inventory during a given period. The level of inventory of the manufactured product remained unchanged. The manufacturing costs were as follows: Variable Fixed Unit manufacturing costs of the period $ 11.00 $ 7.00 Unit operating expenses of the period 3.00 2.50 Which of the following statements is true? a. Net income under absorption costing will be $40,000 more than under variable costing. b. Net income will be the same under both variable and absorption costing. c. Net income under variable costing will be $45,000 less than net income under absorption costing. d. The difference in net income cannot be determined.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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S&P Enterprises sold 10,000 units of inventory during a given period. The level of inventory of the manufactured product remained unchanged. The manufacturing costs were as follows: Variable Fixed Unit manufacturing costs of the period $ 11.00 $ 7.00 Unit operating expenses of the period 3.00 2.50 Which of the following statements is true? a. Net income under absorption costing will be $40,000 more than under variable costing. b. Net income will be the same under both variable and absorption costing. c. Net income under variable costing will be $45,000 less than net income under absorption costing. d. The difference in net income cannot be determined.
Transcribed Image Text:S&P Enterprises sold 10,000 units of inventory during a given period. The level of inventory of the manufactured product remained unchanged. The manufacturing costs were as follows: Variable Fixed Unit manufacturing costs of the period $ 11.00 $ 7.00 Unit operating expenses of the period 3.00 2.50 Which of the following statements is true? a. Net income under absorption costing will be $40,000 more than under variable costing. b. Net income will be the same under both variable and absorption costing. c. Net income under variable costing will be $45,000 less than net income under absorption costing. d. The difference in net income cannot be determined.
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