Kern Corporation Produces a Single Product

question 215

Multiple Choice

Kern Corporation produces a single product. Selected information concerning the operations of the company follow: Assume that direct labor is a variable cost.
Which costing method, absorption or variable costing, would show a higher operating income for the year and by what amount?

• A) Absorption costing net operating income would be higher than variable costing net operating income by $2,500.
• B) Variable costing net operating income would be higher than absorption costing net operating income by $2,500.
• C) Absorption costing net operating income would be higher than variable costing net operating income by $5,500.
• D) Variable costing net operating income would be higher than absorption costing net operating income by $5,500.

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Definitions:

Employment Choices

The various options and decisions that individuals face regarding their work life, including job selection, career paths, and work-life balance.

External Labour Market

The job market outside of an organization, including potential employees who could be recruited or hired.

Selection Strategies

Methods and processes used to identify, evaluate, and choose the most appropriate candidates for a specific role or purpose.

Organization's Overall Effectiveness

A measure of how well an organization achieves its goals and objectives through efficient use of resources, processes, and people management.