Bella Ltd Has Operated for 2 Years

question 23

Multiple Choice

Bella Ltd has operated for 2 years. During that time it produced 1,000 units in year 1 and 800 in year 2, while sales were 800 units in year 1 and 900 in year 2. Variable production costs were $8 per unit during both years. The company uses last-in, first-out (LIFO) for inventory costing. The absorption costing income statements for these 2 years were: Operating profit for year 2 using variable costing would be

• A) $1,000
• B) $1,600
• C) $4,000
• D) $1,450

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Definitions:

Perishable Goods

Items, especially food, that deteriorate quickly over time or if not stored under proper conditions.

Inspect Goods

The process of examining merchandise or commodities for quality, quantity, and condition to ensure they meet specified criteria.

COD

An abbreviation for Cash On Delivery, a transaction where payment for a good or service is made at the time of delivery.

UCC Section 2-301

A provision of the Uniform Commercial Code dealing with the obligation of the seller to transfer and deliver goods, and the buyer’s obligation to accept and pay for them.