Pop Quiz-Chapter 9
If the number of units produced exceeds the number of units sold, then net operating income under absorption costing will:
be equal to the net operating income under variable costing.
be greater than net operating income under variable costing.
be equal to the net operating income under variable costing plus total fixed manufacturing costs.
be equal to the net operating income under variable costing less total fixed manufacturing costs.
Over an extended period of time in which the final ending inventories are zero, the accumulated net operating income figures reported under absorption costing will be:
greater than those reported under variable costing.
less than those reported under variable costing.
the same as those reported under variable costing.
higher or lower since no generalization can be made.
Routsong Company had the following sales and production data for the past four years:
| | |Year 1 |Year 2 |Year 3 |Year 4 | | |Production in units |6,000 |9,000 |4,000 |5,000 | | |Sales in units |6,000 |6,000 |5,000 |7,000 |
Selling price per unit, variable costs per unit, and total fixed costs are the same in each year. Which of the following statements is not correct?
Under variable costing, net operating income for Year 1 and Year 2 would be the same.
Because of the changes in production levels, under variable costing the per unit inventory value will change each year.
The total net operating income for all four years combined would be the same under variable and absorption costing.
Under absorption costing, net operating income in Year 4 would be less than the...
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