Kosco Corporation Produces a Single Product

question 118

Multiple Choice

Kosco Corporation produces a single product.The company's absorption costing income statement for March follows: During March, the company's variable production costs were $8 per unit and its fixed manufacturing overhead totaled $5, 000. Net operating income under variable costing for March would be:

• A)$7, 200
• B)$7, 000
• C)$7, 600
• D)$6, 800

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Definitions:

Equipment Purchase

Equipment purchase refers to the acquisition of physical assets, such as machinery or tools, necessary for a company to operate and produce goods or provide services.

Operating Activities

Transactions and events that relate to the core business functions, such as receipts from sales of goods and services, payments to suppliers, and salaries to employees.

Depreciable Asset

A type of asset that loses value over time due to wear and tear, decay, or obsolescence, which can be accounted for through depreciation.

Indirect Method

A method of preparing the cash flow statement in which net income is adjusted for non-cash transactions and changes in working capital.