Routsong Corporation Had the Following Sales and Production for the Past

question 141

Multiple Choice

Routsong Corporation had the following sales and production for the past four years: Selling price per unit,variable cost per unit,and total fixed cost are the same each year.There were no beginning inventories in Year 1.Which of the following statements is NOT correct?

• A)Under variable costing,net operating income for Year 1 and Year 2 would be the same.
• B)Because of the changes in production levels,under variable costing the unit product cost will change each year.
• C)The total net operating income for all four years combined would be the same under variable and absorption costing.
• D)Under absorption costing,net operating income in Year 4 would be less than the net operating income in Year 2.

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Definitions:

Underinvestment

The insufficient allocation of resources, typically financial, towards areas that could yield significant benefits or improvements.

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