Oxygen Inc.reports the following information:
Assume that the production and prices were the same in the previous year.Assume no beginning inventories.
Requirements:
a)Calculate unit cost of product using absorption costing and variable costing.
b)Calculate the operating income using absorption costing and variable costing.
Definitions:
Economies of Scale
The advantages in cost that companies receive owing to their operational magnitude, with the expense per produced unit generally diminishing as the scale of operations broadens.
Natural Monopoly
A market condition where the cost of production is minimized by having a single firm produce the product, due to high fixed or startup costs.
Demand Schedules
A table that shows the quantity demanded of a good or service at different price levels.
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