Assume That the Company Uses a Variable Costing System That

question 12

Multiple Choice

Assume that the company uses a variable costing system that assigns $18 of direct labor cost to each unit that is produced. The net operating income under this costing system is:

• A)$78,000
• B)$405,000
• C)$351,000
• D)$594,000

---

Definitions:

Differential Cost

The amount of increase or decrease in cost expected from a particular course of action compared with an alternative.

Unit Cost

The total expense incurred to produce, store, and sell one unit of a product, including direct materials, direct labor, and overhead costs.

Modifying Style

The process of altering or customizing a particular format or design to meet specific requirements.

Sunk Cost

Costs that have already been incurred and cannot be recovered, which should not influence future financial decisions.