Raymond Company Reported the Following Units of Production and Sales

question 20

Multiple Choice

Raymond Company reported the following units of production and sales for June and July:
Net income under absorption costing for June was $40,000; net income under variable costing for July was $50,000. Fixed manufacturing costs were $600,000 for each month.
-Refer to the Figure.What was the net income for June using variable costing?

• A)($40,000)
• B)($20,000)
• C)$20,000
• D)$40,000

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Definitions:

Second Worker

The term "second worker" can refer to an additional employee hired to perform tasks, often implying the expansion of workforce due to increased workload.

Law of Diminishing Marginal Returns

A principle stating that adding an additional factor of production results in smaller increases in output after a certain point, holding other inputs constant.

Variable Input

An input used in production that can be adjusted in the short term, such as labor or raw materials.

Short Run

A period in which at least one input or resource is fixed, limiting the capacity to adjust all factors of production.