During Its First Year of Operations, Kima Corp

question 96

Multiple Choice

During its first year of operations, Kima Corp. experienced the following: Units manufactured 70,000
Units sold 60,000
Product costs:
Variable $10.50/unit
Fixed $315,000
Selling and Administrative:
Variable $1.60/unit
Fixed $140,000
If Kima calculates operating income under the variable costing method as opposed to the absorption costing method, operating income will be:

• A)$45,000 lower
• B)$270,000 lower
• C)$315,000 higher
• D)$270,000 higher

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Definitions:

Nominal Scale

The simplest form of measurement in which data are categorized based on qualitative attributes or names without a numerical or ordered value.

Independent Variables

Variables that are manipulated or controlled in an experiment to test their effect on dependent variables.

Dependent Variables

A measure that is expected to vary in response to changes in an independent variable within an experiment.

Pearson Correlation

A statistical measure that evaluates the linear relationship between two continuous variables, expressed as a value between -1 and 1.