Farris Company, Which Has Only One Product, Has Provided the Following

question 8

Multiple Choice

Farris Company, which has only one product, has provided the following data concerning its most recent month of operations:
-What is the net operating income for the month under variable costing?

• A)£14,500
• B)£17,400
• C)£11,300
• D)£2,900

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Definitions:

Direct Labour-Hours

The hours worked directly on the production of goods or services by employees.

Job-Order Costing System

A job-order costing system is an accounting method that assigns manufacturing costs to individual products or job orders based on the specific resources each job consumes.

Process Costing

An accounting methodology used in industries where production is continuous, assigning costs to units of product based on the process they have undergone.

Job-Order Cost Sheet

A detailed document that tracks the production costs directly associated with a specific job or order, including materials, labor, and overhead costs.