Consider the Following Statements Regarding Absorption Costing and Variable Costing

question 10

Multiple Choice

Consider the following statements regarding absorption costing and variable costing.
i. Profit reported under absorption costing for a year will likely differ from that reported under variable costing because production and sales differ.
ii. Total profit when added together over a ten-year period will be approximately equal under absorption costing and variable costing because production and sales will be approximately the same.
iii. Total profit when added together over a ten-year period will be significantly different under absorption and variable costing because fixed costs will generally increase significantly over that long.
Which statement/s is/are true?

• A) i
• B) i and ii
• C) i and iii
• D) ii

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Definitions:

UPA

The Uniform Partnership Act (UPA) is a set of laws adopted by many states in the U.S. to govern the operation of partnerships and the relationship between partners.

Partnership Assets

The resources and property owned by a partnership that are used for conducting its business activities.

Liabilities Priority

The order in which obligations or debts of a company or individual are to be paid if there are insufficient assets to pay all liabilities in full.

Fraudulent Act

refers to any deliberate deception intended to secure an unfair or unlawful gain, or to deprive a victim of a legal right.