S&P Enterprises Sold 10,000 Units of Inventory During a Given

question 103

Multiple Choice

S&P Enterprises sold 10,000 units of inventory during a given period. The level of inventory of the manufactured product remained unchanged. The manufacturing costs were as follows: Which of the following statements is true?

• A) Net income will be the same under both variable and absorption costing.
• B) Net income under variable costing will be $45,000 less than net income under absorption costing
• C) Net income under absorption costing will be $40,000 more than under variable costing.
• D) The difference in net income cannot be determined.

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Definitions:

Nulli-

A prefix that denotes none or without, often used in medical terms to denote the absence of certain experiences or conditions.

Concentrate

To increase the strength or proportion of a substance by reducing its volume, typically by evaporation or by removing water.

Infrastructure

The fundamental physical and organizational structures and facilities (e.g., buildings, roads, power supplies) needed for the operation of a society or enterprise.

Extraocular

Outside the eyeball, often relating to the muscles that control the movements of the eye.