In the Month of December the Valhalla Company Produced 28,000

question 15

Multiple Choice

In the month of December the Valhalla Company produced 28,000 units and sold 30,000 units. Under absorption costing:

• A) Fixed manufacturing costs will be "released" from inventory and therefore net operating income will be lower than it would under variable costing
• B) Fixed selling & administrative costs will be "released" from inventory and therefore net operating income will be lower than it would under variable costing
• C) Fixed manufacturing costs will be included in inventory instead of on the income statement and therefore net operating income will be higher than it would under variable costing
• D) All fixed costs will be "released" from inventory and therefore net operating income will be lower than it would under variable costing

---

Definitions:

Journal

A journal is a detailed account that records all the financial transactions of a business, to be used later for classifying and summarizing into financial statements.

Ledger Accounts

A record in accounting that is used to aggregate monetary transactions by account, monitoring debits and credits over a period.

Journal Entries

The recorded transactions in the financial books of a company, serving as the initial step in the accounting cycle.

T-Accounts

A graphical representation of a general ledger account, showing debits on the left side and credits on the right side to track transactions.