Zanda Corp

question 11

Multiple Choice

Zanda Corp.and Jones Corp.are identical in every way (products produced,costs,demand,etc.) except for one.Zanda uses a level production plan while Jones prefers a chase production plan.Which of the following is most likely to be true?

• A)Jones will have higher investment in plant and equipment.
• B)Jones will have higher hiring and firing costs.
• C)Jones will have lower inventory carrying costs.
• D)All of the selections are true.

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Definitions:

Net Operating Income

The profit a company makes from its operations, calculated as total revenue minus operating expenses, excluding taxes and interest.

Variable Costing

An accounting method that only includes variable production costs—direct materials, direct labor, and variable manufacturing overhead—in product costs.

Absorption Costing

A product costing technique that adds up all manufacturing expenses — direct materials, direct labor, variable, and fixed overheads — into the comprehensive cost of the product.

Net Operating Income

The total profit of a company after operating expenses are subtracted from operating revenues.