Danahy Corporation Manufactures a Single Product

question 145

Multiple Choice

Danahy Corporation manufactures a single product. The following data pertain to the company's operations over the last two years: What was the absorption costing net operating income last year?

• A) $50,000
• B) $48,000
• C) $52,000
• D) $56,000

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Definitions:

Fixed Expenses

Fixed expenses are recurring costs that do not fluctuate with changes in production level or sales volume, such as rent, salaries, and insurance.

Net Present Value

Net present value is a financial calculation that determines the worth of a project or investment by discounting its future cash flows to the present value using a specific discount rate, to assess its profitability.

Present Value Factor

A coefficient used to calculate the present value of a future amount of money or stream of cash flows given a specific rate of return.

Cash Flows

The net amount of cash being transferred into and out of a business, illustrating its ability to generate and use cash.