One Possible Means of Determining the Difference Between Operating Incomes

question 2

Multiple Choice

One possible means of determining the difference between operating incomes for absorption costing and variable costing is by ________.

• A) subtracting sales of the previous period from sales of this period
• B) subtracting fixed manufacturing overhead in beginning inventory from fixed manufacturing overhead in ending inventory
• C) multiplying the number of units produced by the budgeted fixed manufacturing cost rate
• D) adding fixed manufacturing costs to the production-volume variance

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Definitions:

Bill Of Lading

A document issued by a person engaged in the business of transporting goods that verifies receipt of the goods for shipment.

Transporting Goods

The process of moving products or materials from one place to another by road, rail, sea, or air.

Receipt

A written or electronic acknowledgement that a specific exchange, transaction, or delivery has occurred.

Mutual Benefit

A situation or agreement in which all parties involved gain or benefit from the arrangement.