Bradman Corporation Has Reported Operating Profit of $30 000 and a Fixed

question 80

Multiple Choice

Bradman Corporation has reported operating profit of $30 000 and a fixed overhead cost rate is $20 per unit for the current accounting period.Under absorption costing,if this company now produces an additional 100 units of inventory,then operating profit:

• A)will increase by $2000.
• B)will not be affected.
• C)will increase by $2000 only if the additional 100 units of inventory are sold.
• D)is indeterminable.

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Definitions:

Output

The total amount of goods and services produced by an economy or an individual business over a specific period.

Total Cost

The complete cost of producing a specific quantity of goods or services, including both fixed and variable costs.

Average Cost

This is the total cost of production divided by the number of goods produced, also known as the cost per unit.