The Following Information Regarding Fixed Production Costs from a Manufacturing

question 62

Multiple Choice

The following information regarding fixed production costs from a manufacturing firm is available for the current year: 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 $116,000.
• B) The maximum difference between this firm's the current year income based on absorption costing and its income based on variable costing is $16,000.
• C) Using variable costing, this firm will deduct no more than $16,000 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.

---

Definitions:

Cause And Effect

A relationship where one event (the cause) makes another event happen (the effect).

Conclusions

Statements or judgments that are formed after considering the relevant facts or evidence.

Confounded Variables

External factors in an experiment that might affect the outcome, making it difficult to determine if the results are due to the independent variable being tested.

Independent Variables

Factors in an experiment that are manipulated or changed by the researcher to observe their effects on the dependent variables.