Eagle Corporation Manufactures a Picnic Table

question 95

Multiple Choice

Eagle Corporation manufactures a picnic table. Shown below is Eagle's cost structure: In its first year of operations, Eagle produced and sold 10,000 tables. The tables sold for $120 each.
-How would Eagle's absorption costing net operating income have been affected in its first year if 12,000 tables were produced instead of 10,000 and Eagle still sold 10,000 tables?

• A)net operating income would not have been affected
• B)net operating income would have been $27,000 higher
• C)net operating income would have been $31,500 higher
• D)net operating income would have been $116,000 lower

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Definitions:

Intangible Property

Assets that cannot be physically touched or held, such as intellectual property or financial securities.

UCC

The Uniform Commercial Code, a set of laws that provide legal rules and regulations governing commercial or business transactions and contracts.

Real Estate

Property consisting of land and the buildings on it, along with its natural resources such as crops, minerals, or water.

Mutual Mistake

Mistake as to the same material fact on the part of both parties to a contract. In this situation, either party can cancel the contract.