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

question 85

Multiple Choice

Kidwell Company, which has only one product, has provided the following data concerning its most recent month of operations: The company produces the same number of units every month, although the sales in units vary from month to month. The company's variable costs per unit and total fixed costs have been constant from month to month.
107. What is the net operating income for the month under variable costing?
A. $5,800
B. $5,400
<underLine>C.</underLine> $8,300
D. $16,000
-What is the net operating income for the month under absorption costing?

• A) $5,800
• B) $16,000
• C) $5,400
• D) $8,300

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Definitions:

Liquidation

The procedure of concluding a company's operations and allocating its resources among those who have claims.

Conservatism

An accounting principle that requires potential expenses and liabilities to be recognized immediately, but revenue only when it is ensured.

Chapter 7 Bankruptcy

A type of bankruptcy that involves the liquidation of a debtor's assets to repay creditors, under the U.S. Bankruptcy Code.