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:

Psychological Distress

A state of emotional suffering characterized by symptoms such as anxiety, depression, and stress.

Commonly Occurring Fantasies

Mental imagery or thoughts about situations that are frequently imagined by individuals, often of a sexual nature.

New-product Development

It refers to the complete process of bringing a new product or service to market, including idea generation, concept testing, design, development, and marketing.

Customers

Individuals or organizations that purchase goods or services for personal use or to fulfill their own business needs.