The Level of Inventory of a Manufactured Product Has Increased

question 153

Multiple Choice

The level of inventory of a manufactured product has increased by 5,000 units during a period. The following data are also available: What would be the effect on income from operations if variable costing is used rather than absorption costing?

• A) $50,000 decrease
• B) $50,000 increase
• C) $65,000 increase
• D) $65,000 decrease

---

Definitions:

Starch

A carbohydrate consisting of a large number of glucose units joined by glycosidic bonds, primarily found in plants and used as an energy store.

Carboxypeptidase

An enzyme that breaks down proteins by hydrolyzing the peptide bonds at the carboxyl end of the protein.

Microvilli

Minute projections from the surface of some cells, increasing surface area and facilitating absorption, such as in the intestines.

Goblet Cells

Epithelial cells found in the respiratory and intestinal tracts that secrete mucus to lubricate and protect the linings.