What Is Red and White's Net Income Under Absorption Costing

question 65

Multiple Choice

What is Red and White's net income under absorption costing if 980 units are sold and operating expenses are $12,000?

• A) $(1,380)
• B) $(2,000)
• C) $2,700
• D) $6,620
• E) $10,620

---

Definitions:

Financial Reporting

The process by which a company communicates its past financial performance, current financial position, and future financial expectations to internal and external stakeholders.

Units Sold

The total number of product units a company has sold within a specific period.

Indirect Manufacturing Cost

Costs in producing a product that are not directly traceable to the product, such as maintenance and utilities.

Units Produced

The total number of units of product completed by a company during a given period.