The Level of Inventory of a Manufactured Product Has Increased

question 118

Multiple Choice

The level of inventory of a manufactured product has increased by 7,000 units during a period.The following data are also available: ​
What would be the effect on income from operations if absorption costing is used rather than variable costing?

• A) $42,000 decrease
• B) $42,000 increase
• C) $52,500 increase
• D) $52,500 decrease

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Definitions:

Downward-Sloping

Refers to a curve or line that decreases in value as it moves from left to right, often used in economics to describe demand curves where quantity demanded decreases as the price increases.

Demand Curve

A graph showing the relationship between the price of a good and the quantity of the good that consumers are willing and able to buy.

Monopoly

A market structure characterized by a single seller selling a unique product in the market with no close substitutes.

Above MR Curve

A situation where the price level of goods or services is higher than the marginal revenue that these goods or services generate.