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Kern Corporation Produces a Single Product

question 17

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Kern Corporation produces a single product. Selected information concerning the operations of the company follow: Kern Corporation produces a single product. Selected information concerning the operations of the company follow:   Assume that direct labor is a variable cost.Which costing method, absorption or variable costing, would show a higher operating income for the year and by what amount? A)  Absorption costing net operating income would be higher than variable costing net operating income by $2,500. B)  Variable costing net operating income would be higher than absorption costing net operating income by $2,500. C)  Absorption costing net operating income would be higher than variable costing net operating income by $5,500. D)  Variable costing net operating income would be higher than absorption costing net operating income by $5,500. Assume that direct labor is a variable cost.Which costing method, absorption or variable costing, would show a higher operating income for the year and by what amount?

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