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

question 29

Multiple Choice

The company is considering using either super-variable costing or an absorption costing system that assigns $28 of direct labor cost and $70 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 $6,000.
• B)Absorption costing net operating income exceeds super-variable costing net operating income by $588,000.
• C)Absorption costing net operating income exceeds super-variable costing net operating income by $6,000.
• D)Super-variable costing net operating income exceeds absorption costing net operating income by $588,000.

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Definitions:

Entrepreneurial

Pertaining to the characteristics, behaviors, and practices of individuals who initiate, organize, and operate a business venture.

Asian American

A term referring to individuals in the United States who have Asian ancestry from countries within the continent of Asia.

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