Operating Income Determined Using Absorption Costing Can Be Reconciled to Operating

question 110

Multiple Choice

Operating income determined using absorption costing can be reconciled to operating income determined using variable costing by computing the difference between which of the following?

• A) Fixed manufacturing overhead costs deferred in or released from inventories.
• B) Discretionary costs included in the beginning and ending inventories.
• C) Gross margin (absorption costing method) and contribution margin (variable costing method).
• D) Sales as recorded under the variable costing method and sales as recorded under the absorption costing method.

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Definitions:

Chestnut Blight

A fungal disease caused by Cryphonectria parasitica, which has devastated chestnut trees in North America by causing cankers that girdle and kill the trees.

Net Productivity

is the rate at which energy or biomass accumulates in an ecosystem's producers, after subtracting the energy used in respiration, representing the amount of new biological material.

Mineral Release

The process by which minerals become available to organisms in the environment, often through the weathering of rocks or decomposition of organic matter.

Sulfates

Compounds that contain the sulfate ion, SO4^2-, known for their role in atmospheric processes and potential to cause acid rain.