(Appendix 5A)Albanese Corporation Manufactures and Sells One Product

question 45

Multiple Choice

(Appendix 5A) Albanese Corporation manufactures and sells one product.The following information pertains to the company's first year of operations: The company does not have any variable manufacturing overhead costs or variable selling and administrative costs.During its first year of operations, the company produced 36, 000 units and sold 29, 000 units.The company's only product is sold for $236 per unit. The company is considering using either super-variable costing or an absorption costing system that assigns $16 of direct labor cost and $72 of fixed manufacturing overhead to each unit that is produced.Which of the following statements is true regarding the net operating income in the first year?

• A)Super-variable costing net operating income exceeds absorption costing net operating income by $616, 000.
• B)Absorption costing net operating income exceeds super-variable costing net operating income by $616, 000.
• C)Absorption costing net operating income exceeds super-variable costing net operating income by $504, 000.
• D)Super-variable costing net operating income exceeds absorption costing net operating income by $504, 000.

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Definitions:

Reticular Formation

An extensive network of neurons located in the brainstem that plays a key role in controlling arousal and consciousness.

Scientific Approach

A methodological way of seeking knowledge that involves observation, hypothesis formulation, experimentation, and conclusion.

Psychology

The scientific study of behavior and mental processes.

Objectivity

The practice of maintaining impartiality and neutrality, avoiding bias or subjective influence in judgments or actions.