The Level of Inventory of a Manufactured Product Has Increased

question 142

Multiple Choice

The level of inventory of a manufactured product has increased by 8,000 units during a period. The following data are also available: What would be the effect on income from operations if variable costing is used rather than absorption costing?

• A) $80,000 decrease
• B) $80,000 increase
• C) $104,000 decrease
• D) $104,000 increase

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Definitions:

Issuance Date

The date on which a financial instrument (e.g., bond, stock, or certificate of deposit) is issued or made available for sale.

Accrued Interest

The interest that has accumulated on a bond or loan but has not yet been paid to the lender, often recorded as a current liability on the balance sheet.

Accrued Interest

Interest that has been earned but not yet received or recorded as income by the company.

Face Value

The nominal or dollar value printed on a bond, note, or other financial instrument.