How Will a Favorable Volume Variance Affect Net Income Under

question 125

Multiple Choice

How will a favorable volume variance affect net income under each of the following methods?

• A)reduce no effect
• B)reduce increase
• C)increase no effect
• D)increase reduce

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Definitions:

Sole Proprietorship

A business structure where a single individual owns and operates the business.

Corporate Income Tax

A tax on the income or profit of corporations, which contributes to government revenue.

Gross Investment

The total amount of money spent on capital goods, or assets intended to produce future income, not accounting for depreciation.

Net Investment

The total amount spent on capital assets, like buildings and machinery, minus depreciation. It reflects the increase in the value of physical assets.