Allston Products Sells a Special Kind of Effects Pedal for Musical

question 82

Multiple Choice

Allston Products sells a special kind of effects pedal for musical performers. Each unit sells for $20.00. Additional data for the month of April, 2011, are as follows: Which of the following statements is TRUE?

• A)Absorption costing produces operating income that is $875 higher than variable costing.
• B)Absorption costing produces operating income that is $875 lower than variable costing.
• C)Absorption costing produces operating income that is $13,125 higher than variable costing.
• D)Absorption costing produces operating income that is $13,125 lower than variable costing.

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Definitions:

Receipt

A document acknowledging that a payment has been made or that goods have been received.

Supplies Expense

The cost associated with consumable items used during the process of operating a business, recorded as an operating expense on the income statement.

Supplies Order

The process of acquiring necessary materials or goods required for the operation of a business or execution of a task.

Used Supplies

Consumable items that have been utilized in the operation of a business, typically recorded as an expense.