The Following Information Regarding Fixed Production Costs from a Manufacturing

question 188

Multiple Choice

The following information regarding fixed production costs from a manufacturing firm is available for the current year:

• A)The maximum amount of fixed production costs that this firm could deduct using absorption costs in the current year is $116,000.
• B)The maximum difference between this firm's the current year income based on absorption costing and its income based on variable costing is $16,000.
• C)Using variable costing,this firm will deduct no more than $16,000 for fixed production costs.
• D)If this firm produced substantially more units than it sold in the current year,variable costing will probably yield a lower income than absorption costing.

Fixed costs in the beginning inventory	$ 16,000
Fixed costs incurred this period	100,000

Which of the following statements is not true?

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Definitions:

Secured Parties

Creditors or lenders who have a secured interest in a borrower's collateral to secure repayment of the loan.

Secured Creditor

A lender or creditor who has a legal right to seize collateral if the borrower fails to repay the debt as agreed.

After-Acquired Inventory

Inventory obtained by a company after it has granted a security interest in its inventory to a creditor, which may also fall under the security interest for that creditor.

Financing Statement

A document filed to give public notice of a secured transaction, thereby establishing a lender's security interest in the borrower's collateral.