PFA Ltd Uses a Throughput Costing System and Reported the Following

question 87

Multiple Choice

PFA Ltd uses a throughput costing system and reported the following information for its first month of operations: Units produced…………………………………..140
Units sold………………………………………..120
Material cost per unit produced……………….$3.50
Conversion cost per unit produced……………$6.50
Fixed period costs per unit produced………….$6.00
Variable period costs per unit produced………$4.00
Selling price per unit…………………………$25.00
Under which of the following costing methods would PFA report the highest operating profit?

• A) Absorption costing
• B) Variable costing
• C) Throughput costing
• D) Profit will be equal under all three methods

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Definitions:

Realistic Job Preview

A recruitment tool that provides potential applicants with a true representation of the responsibilities and conditions of a job.

Indexation

A method of estimating future employment needs by matching employment growth with a selected index, such as the ratio of production employees to sales.

Underutilization

A condition that exists when a department or employer has a lesser proportion of members of a protected class than are found in the employer’s labour market.

Extrapolation

Extending past rates of change into the future.