Use the Information Below to Answer the Following Question(s)

question 57

Multiple Choice

Use the information below to answer the following question(s) .Urban Body Products Ltd.manufactures body wash liquid soap.The controller has provided the following information and stated that standard costing is used for manufacturing, marketing, and administrative costs. There were no beginning or ending inventories of materials or work-in-process.
-Which of the following is correct concerning variable vs absorption costing?

• A)Absorption costing income statement classifies fixed costs as period costs.
• B)The absorption costing income statement combines costs by cost behaviour.
• C)Absorption costing income statements need to differentiate between variable and fixed costs.
• D)The difference in operating income between the two approaches is captured by the difference between fixed manufacturing costs in ending inventory minus fixed manufacturing costs in opening inventory.
• E)The difference in operating income between the two approaches is captured by the difference between fixed manufacturing costs in ending inventory minus variable manufacturing costs in ending inventory.

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Definitions:

Ratio of Labor Cost

A financial metric that measures the total labor costs in relation to another metric, often used to assess efficiency or productivity.

Least-Costly Combination

An economic principle that describes the mix of factors of production (like labor and capital) that minimizes cost for a certain level of output.

MRPs

The marginal revenue product of labor refers to the increase in revenue a firm sees when adding one additional unit of labor, holding other factors constant.

Variable Resources

Factors of production such as labor, capital, and raw materials that can be adjusted in the short term to meet changes in demand or production.