Smith Company Had Net Operating Income of £125,000 Using Variable

question 61

Multiple Choice

Smith Company had net operating income of £125,000 using variable costing and £105,000 using absorption costing. Variable production costs were £20 per unit. Total fixed manufacturing overhead was £176,000 and 11,000 units were produced. During the year, the stock level

• A)increased by 1,000 units.
• B)increased by 1,250 units.
• C)decreased by 1,000 units.
• D)decreased by 1,250 units.

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Definitions:

Public Support

The backing or endorsement by the general population for a person, policy, or initiative.

Non-Controlling Interest

The portion of equity in a subsidiary not attributable directly or indirectly to the parent company, reflecting the minority shareholders' share in the subsidiary's net assets.

Identifiable Net Assets Method

A technique used in business combinations where only the assets and liabilities that can be identified and valued are included in the calculations of the purchase price allocation.

Amortization

The gradual reduction of a debt over a period of time through regular payments covering interest and principal.