Assume a Manufacturing Company That Has Started Production in the Current

question 49

Multiple Choice

Assume a manufacturing company that has started production in the current year. Which of the following would result in the highest profit being reported if the company has 1,000 units of ending inventory?

• A) throughput costing
• B) variable costing
• C) absorption costing
• D) standard costing

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Definitions:

Cash Disbursements

The actual outflow of cash for expenses, such as paying salaries, suppliers, and other operating expenses.

Inventory Purchases

The total cost incurred by a business to buy goods for resale or raw materials to produce finished goods.

Operating Expenses

Costs related to the day-to-day functions of a business outside of direct labor and materials, such as rent, utilities, and office supplies.

Budgeted Cash Disbursements

An estimation of the cash outflows a company anticipates over a specified period, including expenses, payments to creditors, and investments.