Routsong Corporation Had the Following Sales and Production for the Past

question 104

Multiple Choice

Routsong Corporation had the following sales and production for the past four years: Selling price per unit, variable cost per unit, and total fixed cost are the same each year. There were no beginning inventories in Year 1. Which of the following statements is NOT correct?

• A)Under variable costing, net operating income for Year 1 and Year 2 would be the same.
• B)Because of the changes in production levels, under variable costing the unit product cost will change each year.
• C)The total net operating income for all four years combined would be the same under variable and absorption costing.
• D)Under absorption costing, net operating income in Year 4 would be less than the net operating income in Year 2.

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Definitions:

Binders

Tools or devices used for holding together pages or other materials for organization and protection.

Market for Paper

An economic marketplace involving the buying, selling, and trading of paper products, including raw materials for paper and finished products like books and magazines.

Economic Order Quantity

A formula used in inventory management to determine the optimum order quantity that minimizes total inventory holding costs and ordering costs.

Inventory Control

A control that ensures that inventory is only big enough to meet immediate needs.