How Will Net Income React Using the Variable Costing Method

question 80

Multiple Choice

How will net income react using the variable costing method, assuming monthly production volume is constant but fewer items are sold during the period than are produced in that same period?

• A) Net income will be equal to contribution margin per unit times units sold.
• B) Net income will be equal to net income determined using the absorption costing method.
• C) Net income will be less than net income determined using the absorption costing method.
• D) Net income will be greater than net income determined using the absorption costing method.

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Definitions:

Frequency Table

A table that displays the frequencies of different data categories, showing how often each category occurs in the dataset.

Mound-Shaped Distribution

Another term for a normal distribution, characterized by its bell-shaped curve that is symmetrical around the mean.

Standard Deviation

A measure of the amount of variation or dispersion in a set of values, indicating how much the values in the set differ from the mean.

Mean Sales

The average revenue from sales over a specific period of time.