During the Last Year,Moore Company's Total Variable Production Costs Were

question 51

Multiple Choice

During the last year,Moore Company's total variable production costs were $10,000,and its total fixed manufacturing overhead costs were $6,800.The company produced 5,000 units during the year and sold 4,600 units.There were no units in the beginning inventory.Which of the following statements is true?

• A) The operating income under absorption costing for the year will be $800 higher than operating income under variable costing.
• B) The operating income under absorption costing for the year will be $544 higher than operating income under variable costing.
• C) The operating income under absorption costing for the year will be $544 lower than operating income under variable costing.
• D) The operating income under absorption costing for the year will be $800 lower than operating income under variable costing.

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Definitions:

Merchandise Inventory

Goods that a retailer or wholesaler purchases to sell to customers, held as an asset on the balance sheet.

Work in Process

Refers to partially finished goods that are still in the production process at the end of an accounting period.

Weighted Average

A calculation that takes into account the varying degrees of importance of the numbers in a data set, often used in calculating the cost of inventory or the average cost of capital.

Unit Cost

The cost incurred to produce, purchase, or acquire a single unit of a product or service.