Affinity Makes a Single Product, Pool Pumps Under Which Method Will Net Income Be Larger?
A)Variable Costing

question 63

Multiple Choice

Affinity makes a single product, pool pumps.Information for 2017 appears below (Assume the same unit costs in all years) : $$\begin{array} { l r } \text { Sales in units } & 5,800 \\\text { Production in units } & 6,200 \\\text { Beginning inventory } & 1,500 \\\text { Variable production cost per unit } & \$ 46.00 \\\text { Variable selling cost per unit } & \$ 6.00 \\\text { Fixed production cost per year } & \$ 31,000 \\\text { Fixed selling and administrative cost per year } & \$ 24,000 \\\text { Selling price per unit } & \$ 75.00\end{array}$$ Under which method will net income be larger?

• A)Variable costing
• B)Full costing
• C)Net income under both the variable and full costing methods will be the same.
• D)The answer cannot be determined from the information provided.

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Definitions:

Intangible Assets

Non-physical assets of a business that have value, such as patents, trademarks, goodwill, and brand recognition.

Durable Goods

Products that are intended to last for a considerable length of time (over three years), such as appliances, vehicles, and furniture.

Nondurable Goods

Products that are consumed or have a useful life shorter than three years, such as food, beverages, and paper products.

Economic Value

The worth or usefulness of a good or service determined by its ability to fulfill consumer needs and preferences.