How Much Will Jefferson's Total Income from Operations Increase

question 22

Multiple Choice

How much will Jefferson's total income from operations increase?

• A) $37,500
• B) $100,000
• C) $62,500
• D) $150,000

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Definitions:

Variable Costing

A costing method that includes only variable production costs (direct materials, direct labor, and variable manufacturing overhead) in the cost of a product.

Unit Product Cost

The total cost (both direct and indirect) allocated to a single unit of product, used in setting prices and assessing profitability.

Variable Costing

A method of inventory costing that includes only variable production costs (materials, labor, and variable overhead) in the cost of goods sold, treating fixed overhead as a period expense.

Net Operating Income

The profit a company makes after deducting operating expenses like wages, depreciation, and cost of goods sold, but before interest and taxes.