Ulmer Company Has Three Product Lines, X, Y, and Z

question 82

Multiple Choice

Ulmer Company has three product lines, X, Y, and Z. The following information is available:

-Assuming product line Z is discontinued and the space formerly used to produce product Z is rented for $4,000 per year, operating income will

• A) increase $2,200.
• B) increase $3,000.
• C) increase $4,000.
• D) increase $4,800.

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Definitions:

LIFO Reserve

The difference between the cost of inventory calculated under the Last-In, First-Out method and the FIFO method.

LIFO

Last-In, First-Out, an inventory management method where the most recently produced or acquired items are sold first.

FIFO

An inventory valuation method that assumes the first items placed in inventory are the first sold, standing for 'First In, First Out'.

GAAP

Generally Accepted Accounting Principles, a set of accounting standards and procedures used in the United States to govern financial reporting.