Answer the Following Question(s)using the Information Below

question 113

Multiple Choice

Answer the following question(s) using the information below.Heinrich Corporation budgeted fixed manufacturing costs of $6,000 during 2012.Other information for 2012 includes:
The company uses absorption costing and the fixed manufacturing cost rate is based on the budgeted denominator level.Manufacturing variances are closed to cost of goods sold.
-Which of the following is a weakness particular to the absorption costing method?

• A)A production manager cannot manipulate operating income.
• B)A manager is always encouraged to match the production schedule to estimated demand.
• C)A manager may be encouraged to switch production to difficult to manufacture products.
• D)A downward demand spiral can be created.
• E)A manager may be encouraged to defer maintenance.

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Definitions:

Lemonade

A sweetened beverage made from lemon juice, water, and sugar, often served cold and considered refreshing, particularly in warm weather.

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A popular dish of Italian origin, consisting of a flatbread typically topped with tomato sauce, cheese, and various other ingredients, then baked.

Production Possibilities Frontier

A graphical depiction that shows the maximum quantity of one good that can be produced for every possible quantity of another good, given the available resources and technology.

Burrito

A type of Mexican street food consisting of a wheat flour tortilla wrapped or folded into a cylindrical shape to enclose fillings.