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

question 87

Multiple Choice

Faxon 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 absorption costing?

• A) $11,600
• B) $2,300
• C) $(600)
• D) $9,300

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Definitions:

Inventory System

A method for keeping track of the quantity, location, and status of goods a company has in stock.

Revenue Recorded

The process of documenting income earned by a business during a specific period, usually upon the delivery of goods or services.

Cost Flow Assumption

The method used to allocate costs to inventory and cost of goods sold, such as FIFO, LIFO, or weighted average.

Weighted Average

A calculation that takes into account the varying degrees of importance of the numbers in a data set, providing a measure of central tendency.