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

question 47

Multiple Choice

(Appendix 5A) Schaadt 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 23, 000 units and sold 16, 000 units.The company's only product is sold for $243 per unit. The company is considering using either super-variable costing or a variable costing system that assigns $22 of direct labor cost to each unit that is produced.Which of the following statements is true regarding the net operating income in the first year?

• A)Variable costing net operating income exceeds super-variable costing net operating income by $427, 000.
• B)Variable costing net operating income exceeds super-variable costing net operating income by $154, 000.
• C)Super-variable costing net operating income exceeds variable costing net operating income by $154, 000.
• D)Super-variable costing net operating income exceeds variable costing net operating income by $427, 000.

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Definitions:

Information Search

The process consumers use to gather relevant data and details about products or services before making a purchase decision.

Reasonable Decision

A choice made after careful consideration of facts and logical reasoning, often seen as sensible or practical.

Problem Recognition

The initial step in the decision-making process where individuals realize the difference between their current state and a desired state.

Satisficing Solution

A decision-making strategy that aims for a solution that is good enough, rather than optimal, based on the available information and resources.