Home Products Inc Has Failed to Reach Its Planned Activity

question 36

Multiple Choice

Home Products Inc has failed to reach its planned activity level during its first two years of operation. The following table shows the relationship between units produced, sales, and normal activity for these years and the projected relationship for Year 3. All prices and costs have remained the same for the last two years and are expected to do so in Year 3. Income has been positive in both Year 1 and Year 2. Because Home Products uses a full costing system, one would predict operating income for Year 3 to be:

• A)Greater than operating income under variable costing.
• B)Less than year 2
• C)The same as operating income under variable costing.
• D)Less than the operating income under variable costing.

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Definitions:

Leading Cause

The primary factor or condition that is most responsible for a particular outcome or effect, such as death or disease.

Death

The cessation of all biological functions that sustain a living organism.

Cancer

A group of diseases involving abnormal cell growth with the potential to invade or spread to other parts of the body.

Behavioral Medicine

An interdisciplinary field that applies behavioral and medical knowledge to the treatment, management, and prevention of health problems.