The Management Accountant for Giada's Book Store Has Prepared the Following

question 188

Multiple Choice

The management accountant for Giada's Book Store has prepared the following income statement for the most current year:

If the travel book line had been discontinued,corporate profits for the current year would have decreased by ________.

• A)$97,000
• B)$72,000
• C)$68,000
• D)$58,000

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Definitions:

Manager Bonuses

Extra compensation awarded to managers based on performance criteria or company profitability.

Absorption Costing

An accounting method that includes all manufacturing costs – direct materials, direct labor, and both variable and fixed overhead – in the cost of a product.

Income

The financial gain received by an individual or a business, typically from employment, investments, or sales of goods and services.

Variable Costing

An accounting method that only includes variable production costs (direct materials, direct labor, and variable manufacturing overhead) in product costs, with fixed overhead expenses charged to the period they arise.