Question
Net operating income computed using absorption costing will always be less than net operating income computed...
Net
operating income computed using absorption costing will always be
less than net operating income computed using variable costing.
TRUE OR FALSE
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In general, if inventory increases during an accounting period, ________. absorption costing will report less operating...
In general, if inventory increases during an accounting period,
________.
absorption costing will report less operating income than
variable costing
variable costing will report less operating income than
absorption costing
variable costing and absorption costing will report the same
operating income
both variable costing and absorption costing will show
losses
Under variable costing, A. inventory costs will be lower than under absorption costing. B. inventory costs...
Under variable costing,
A.
inventory costs will be lower than under absorption
costing.
B.
inventory costs will be higher than under absorption
costing.
C.
net operating income will always be lower than under absorption
costing.
D.
net operating income will always be higher than under
absorption costing.
During Heaton Company’s first two years of operations, it reported absorption costing net operating income as...
During Heaton Company’s first two years of operations, it
reported absorption costing net operating income as follows:
Year 1
Year 2
Sales (@ $62 per unit)
$
1,240,000
$
1,860,000
Cost of goods sold (@ $34 per
unit)
680,000
1,020,000
Gross margin
560,000
840,000
Selling and administrative
expenses*
311,000
341,000
Net operating income
$
\249,000\
$
499,000
* $3 per unit variable; $251,000 fixed each year.
The company’s $34 unit product cost is computed as follows:
Direct
materials
$
7...
Operating income determined using absorption costing can be reconciled to operating income determined using variable costing...
Operating income determined using absorption costing can be
reconciled to operating income determined using variable costing by
computing the difference between which of the following?
Select one:
a. Gross margin (absorption costing method) and contribution
margin (variable costing method).cross out
b. Discretionary costs included in the beginning and ending
inventories.cross out
c. Sales as recorded under the variable costing method and sales
as recorded under the absorption costing method.cross out
d. Fixed manufacturing overhead costs deferred in or released
from...
During Heaton Company’s first two years of operations, it reported absorption costing net operating income as...
During Heaton Company’s first two years of operations, it
reported absorption costing net operating income as follows:
Year 1
Year 2
Sales (@ $61 per unit)
$
1,098,000
$
1,708,000
Cost of goods sold (@ $40 per unit)
720,000
1,120,000
Gross margin
378,000
588,000
Selling and administrative expenses*
307,000
337,000
Net operating income
$
71,000
$
251,000
* $3 per unit variable; $253,000 fixed each year.
The company’s $40 unit product cost is computed as follows:
Direct materials
$
6...
During Heaton Company’s first two years of operations, it reported absorption costing net operating income as...
During Heaton Company’s first two years of operations, it
reported absorption costing net operating income as follows:
Year 1
Year 2
Sales (@ $62 per unit)
$
1,054,000
$
1,674,000
Cost of goods sold (@ $43 per unit)
731,000
1,161,000
Gross margin
323,000
513,000
Selling and administrative expenses*
299,000
329,000
Net operating income
$
24,000
$
184,000
* $3 per unit variable; $248,000 fixed each year.
The company’s $43 unit product cost is computed as follows:
Direct materials
$
9...
During Heaton Company’s first two years of operations, it reported absorption costing net operating income as...
During Heaton Company’s first two years of operations, it
reported absorption costing net operating income as follows: Year 1
Year 2 Sales (@ $63 per unit) $ 1,260,000 $ 1,890,000 Cost of goods
sold (@ $34 per unit) 680,000 1,020,000 Gross margin 580,000
870,000 Selling and administrative expenses* 311,000 341,000 Net
operating income $ \269,000\ $ 529,000 * $3 per unit variable;
$251,000 fixed each year. The company’s $34 unit product cost is
computed as follows: Direct materials $ 9...
During Heaton Company’s first two years of operations, it reported absorption costing net operating income as...
During Heaton Company’s first two years of operations, it
reported absorption costing net operating income as follows:
Year 1
Year 2
Sales (@ $63 per unit)
$
1,197,000
$
1,827,000
Cost of goods sold (@ $46 per
unit)
874,000
1,334,000
Gross margin
323,000
493,000
Selling and administrative
expenses*
305,000
335,000
Net operating income
$
\18,000\
$
158,000
* $3 per unit variable; $248,000 fixed each year.
The company’s $46 unit product cost is computed as follows:
Direct
materials
$
10...
During Heaton Company’s first two years of operations, it reported absorption costing net operating income as...
During Heaton Company’s first two years of operations, it
reported absorption costing net operating income as follows:
Year 1
Year 2
Sales (@ $61 per unit)
$
915,000
$
1,525,000
Cost of goods sold (@ $37 per
unit)
555,000
925,000
Gross margin
360,000
600,000
Selling and administrative
expenses*
297,000
327,000
Net operating income
$
\63,000\
$
273,000
* $3 per unit variable; $252,000 fixed each year.
The company’s $37 unit product cost is computed as follows:
Direct
materials
$
6...
During Heaton Company’s first two years of operations, it reported absorption costing net operating income as...
During Heaton Company’s first two years of operations, it
reported absorption costing net operating income as follows:
Year 1
Year 2
Sales (@ $60 per unit)
$
1,080,000
$
1,680,000
Cost of goods sold (@ $41 per unit)
738,000
1,148,000
Gross margin
342,000
532,000
Selling and administrative expenses*
307,000
337,000
Net operating income
$
35,000
$
195,000
* $3 per unit variable; $253,000 fixed each year.
The company’s $41 unit product cost is computed as follows:
Direct materials
$
9...
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