When Sales Are Constant, but the Number of Units Produced

question 32

Multiple Choice

When sales are constant, but the number of units produced fluctuates, net operating income determined by the absorption costing method will:

• A)tend to fluctuate in the same direction as fluctuations in the number of units produced.
• B)tend to remain constant.
• C)tend to fluctuate in the opposite direction as fluctuations in the number of units produced.
• D)fluctuate without any relation to the number of units produced.

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Definitions:

Director

An individual appointed to the board of an organization, responsible for guiding its policy and direction.

Partner Of A Firm

An individual who is part of the partnership that owns and manages the business, sharing in profits and liabilities.

Legal Fiction

A fact assumed by courts for legal reasoning purposes, despite its actual falsehood, often used to achieve equity or adhere to a legal doctrine.

Corporation

A legal entity recognized by law, separate from its owners, with rights to own property, incur debt, sue, and be sued.