What Was the Absorption Costing Net Operating Income Last Year

question 204

Multiple Choice

What was the absorption costing net operating income last year?

• A)$47,000
• B)$49,000
• C)$58,000
• D)$69,000

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Definitions:

Direct Materials Purchases Variance

The difference between the budgeted cost of materials that should have been purchased for the production volume and the actual cost of materials purchased.

Variable Overhead

Costs that fluctuate with production levels, such as utility bills or raw material costs, that are not directly tied to manufacturing.

Materials Price Variance

The difference between the actual cost of raw materials and the standard (expected) cost, used to assess budgeting efficiency.

Direct Materials Purchases Variance

The difference between the actual cost of direct materials purchased and the expected cost at standard prices.