Fixed Factory Overhead Appears on the Absorption-Costing Income Statement As_____

question 98

Multiple Choice

Fixed factory overhead appears on the absorption-costing income statement as_____.

• A)a fixed expense
• B)part of cost of goods sold
• C)a production volume variance
• D)part of cost of goods sold and as a production volume variance

Calculate and interpret the overall contribution margin ratio.

Determine the break-even point for single and multiple products.

Understand and calculate the degree of operating leverage.

Interpret the impact of sales volume changes on net operating income using operating leverage.

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Definitions:

Excess Reserves

The funds that commercial banks hold in their reserves over and above the regulatory requirement set by the central bank.

Reserve Ratio

The fraction of deposits that a bank is required to hold in reserve and not loan out, as mandated by central banking authorities.

Percent

A term used to describe one hundredth of a whole; a way to express fractions, amounts, or changes in quantities in terms of hundredths.

Reserve Requirement

A regulation that sets the minimum amount of reserves a bank must hold against deposits, used as a tool to control banking stability and money supply.