The Company Is Considering Using Either Super-Variable Costing or an Absorption

question 23

Multiple Choice

The company is considering using either super-variable costing or an absorption costing system that assigns $25 of direct labor cost and $56 of fixed manufacturing overhead to each unit that is produced. Which of the following statements is true regarding the net operating income in the first year?

• A)Super-variable costing net operating income exceeds absorption costing net operating income by $486,000.
• B)Absorption costing net operating income exceeds super-variable costing net operating income by $336,000.
• C)Absorption costing net operating income exceeds super-variable costing net operating income by $486,000.
• D)Super-variable costing net operating income exceeds absorption costing net operating income by $336,000.

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Definitions:

MUx

Marginal Utility with respect to a good or service x, representing the additional satisfaction gained from consuming one more unit of it.

Px/Py

A ratio indicating the price of one good (Px) relative to the price of another good (Py), used in economics to analyze consumer choice and purchasing power.

Indifference Curves

Graphical representations used in microeconomics to show combinations of two goods that give the consumer the same level of satisfaction.

Concave

A shape or curve that is rounded inward, like the inside of a circle or sphere, often used in the context of mathematical functions or geometric figures.