The Southern Corporation Manufactures a Single Product and Has the Following

question 335

Multiple Choice

The Southern Corporation manufactures a single product and has the following cost structure: Last year, 7,000 units were produced and 6,800 units were sold. There was no beginning inventory.The carrying value on the balance sheet of the ending inventory of finished goods under variable costing would be:

• A) the same as absorption costing.
• B) $6,800 greater than under absorption costing.
• C) $6,800 less than under absorption costing.
• D) $4,000 less than under absorption costing.

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Definitions:

Annually Compounded

The process of calculating interest on both the initial principal and the accumulated interest from previous periods, once per year.

Nominal Interest Rate

The interest rate before adjustments for inflation or other factors that affect the real value of money.

Annual Rate

The interest rate for a whole year, as opposed to a shorter period, such as monthly or quarterly.

Compounded Annually

The calculation of interest on the original principal and the accumulated interest of prior periods, applied once per year.