Smidt Corporation Has Provided the Following Data for Its Two

question 70

Multiple Choice

Smidt Corporation has provided the following data for its two most recent years of operation:

-The net operating income (loss) under absorption costing in Year 2 is closest to:

• A) $81,000
• B) $13,000
• C) $184,000
• D) $142,000

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Definitions:

Lumpy Assets

Those assets that cannot be acquired smoothly, and that require large, discrete additions. For example, an electric utility that is operating at full capacity cannot add a small amount of generating capacity, at least not economically.

Financial Forecasting

The process of estimating or predicting how a business will perform in the future through the use of historical data and other information.

Fixed Assets Added

Refers to the purchase or acquisition of physical assets by a company that are expected to be used for longer than one accounting period.

Working Capital Strategy

A business approach focusing on managing a company's operational needs efficiently by balancing current assets and current liabilities to maintain liquidity.