Crossbow Corp

question 171

Multiple Choice

Crossbow Corp.produces a single product.Data concerning June's operations follow: For the year in question,net operating income under variable costing will be:

• A)higher than net operating income under absorption costing.
• B)lower than net operating income under absorption costing.
• C)the same as net operating income under absorption costing.
• D)The relation between absorption costing and variable costing net operating income cannot be determineD.Because production exceeds sales,the net operating income for variable costing will be lower than for absorption costing.This occurs because under absorption costing,some of the fixed manufacturing overhead cost is deferred in ending inventories.

---

Definitions:

Dividend

A portion of a company's earnings distributed to its shareholders as a return on investment.

Rate Of Yield

A financial metric that calculates the amount of profit or loss an investment generates, relative to its cost.

Preferred Stock

A type of stock that offers dividends and/or liquidation preference over common stock.

Par

The face value of a bond or stock, or the standard level for a currency.