CC Uses Absorption (Full)costing and Its Direct Competitor,FF Uses

question 2

Multiple Choice

CC uses absorption (full) costing and its direct competitor,FF uses variable costing for internal decision making purposes.Last year,both companies reported the same production and sales volumes.Which is true?

• A)If sales are 10,000 units and production 12,000 units,CC's net income exceeds FF's
• B)If sales are 10,000 units and production 10,000 units,FF's net income exceeds CC's
• C)If sales are 10,000 units and production 8,000 units,FF's net income exceeds CC's
• D)If sales are 12,000 units and production 10,000 units,FF's net income equals CC's
• E)Unable to determine

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Definitions:

Capital Contributions

Investments made by owners or partners in a business, typically in the form of cash, property, or other assets, to provide funding for the business.

Management

The process of dealing with or controlling things or people within an organization.

Profit

The financial gain that is made when the revenue from business activities exceeds its costs.

Limited Partnership

is a form of partnership characterized by having one or more general partners with unlimited liability, and one or more limited partners whose liability is limited to the amount of their investment.