Using Absorption Costing, a Company Can ____ Net Operating Income

question 16

Multiple Choice

Using absorption costing, a company can ____ net operating income by simply producing more than it sells.

• A)decrease
• B)increase
• C)maintain
• D)none of the above

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Definitions:

Equipment

Tangible assets used in the operation or production process of a business, such as machinery, computers, and tools.

Interest Rate

The percentage of a loan that is applied as interest for the borrower, usually shown as an annual rate.

Account

A record summarizing all the transactions pertaining to a particular item in the financial statements.

Annual Rate

The interest rate stated on a yearly basis, often used in the context of savings accounts, loans, or investments to represent the yearly cost or return.