The following information regarding fixed production costs from a manufacturing firm is available for the current year: Fixed costs in the beginning inventory - P16,000; Fixed costs incurred this period - P100,000. Which of the following statements is not true? * a. The maximum amount of fixed production costs that this firm could deduct using absorption costs in the current year is P116,000. b. The maximum difference between this firm's the current year income based on absorption costing and its income based on variable costing is P16,000. c. Using variable costing, this firm will deduct no more than P16,000 for fixed production costs. d. If this firm produced substantially more units than it sold in the current year, variable costing will probably yield a lower income than absorption costing.
The following information regarding fixed production costs from a manufacturing firm is available for the current year: Fixed costs in the beginning inventory - P16,000; Fixed costs incurred this period - P100,000. Which of the following statements is not true? * a. The maximum amount of fixed production costs that this firm could deduct using absorption costs in the current year is P116,000. b. The maximum difference between this firm's the current year income based on absorption costing and its income based on variable costing is P16,000. c. Using variable costing, this firm will deduct no more than P16,000 for fixed production costs. d. If this firm produced substantially more units than it sold in the current year, variable costing will probably yield a lower income than absorption costing.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
The following information regarding fixed production costs from a manufacturing firm is available for the current year: Fixed costs in the beginning inventory - P16,000; Fixed costs incurred this period - P100,000. Which of the following statements is not true? *
a. The maximum amount of fixed production costs that this firm could deduct using absorption costs in the current year is P116,000.
b. The maximum difference between this firm's the current year income based on absorption costing and its income based on variable costing is P16,000.
c. Using variable costing, this firm will deduct no more than P16,000 for fixed production costs.
d. If this firm produced substantially more units than it sold in the current year, variable costing will probably yield a lower income than absorption costing.
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