Zintec Has Fixed Manufacturing Costs of $400,000 and Produces 10,000

question 55

Multiple Choice

Zintec has fixed manufacturing costs of $400,000 and produces 10,000 and sells 8,000 wagons during the year.There is no beginning inventory.Which of the following conclusions can be drawn?

• A)Variable costing income will be $80,000 higher than full costing income.
• B)Full costing income will be $80,000 higher than variable costing income.
• C)Variable and full costing income will be the same.
• D)There is not enough information to draw a conclusion.

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Definitions:

Cost Per Unit

It represents the total cost incurred for producing, manufacturing, or acquiring a product divided by the number of units.

Volume Variance

A measure of the difference between the budgeted and actual volume of production, affecting costs or profitability.

Manufacturing Overhead

All manufacturing costs that are not direct labor or direct materials, such as utilities, depreciation, and maintenance of equipment.

Direct Labor-Hours

The total hours worked by employees directly involved in the manufacturing process.