In Its First Year of Business,Talula,Inc

question 126

Multiple Choice

In its first year of business,Talula,Inc.produced and sold 600 units.If Talula uses variable costing,________.

• A) its operating income for the period will be higher than under absorption costing
• B) its operating income for the period will be lower than under absorption costing
• C) its value of ending Finished Goods Inventory reported in the balance sheet will be higher than under absorption costing
• D) its operating income will be the same as under absorption costing

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Definitions:

Revenue Accounts

Accounts used to record the income generated from a company's primary operations.

Credit Balance

A situation where the amount of credits in an account exceeds the debits, signifying an amount owed to the account holder.

Accounts Payable

Liabilities representing amounts owed by a company to creditors for goods and services that have been purchased or received but not yet paid for.

Asset

An economic resource or a controlled item of value that an individual, corporation, or country owns or controls with the expectation that it will provide future benefit.