Asked by precious edwards on Jun 17, 2024
Verified
Income for year 2 using absorption costing is:
A) $109,000.
B) $117,000.
C) $106,600.
D) $115,000.
E) $111,000.
Absorption Costing
An accounting method that includes all the costs associated with manufacturing a product, including direct, indirect, fixed, and variable costs.
- Examine the distinctions and similarities between income computations using absorption costing and variable costing, noting the effects on financial statements and the process of making decisions.
Verified Answer
LR
Lizzie RojasJun 23, 2024
Final Answer :
C
Explanation :
Absorption costing includes all manufacturing costs, both fixed and variable, in the cost of a product. The income under absorption costing can be different from that under variable costing due to the treatment of fixed manufacturing overhead. Without specific details on production, sales, and costs, it's not possible to calculate or confirm the correct income figure directly. However, given the options provided and assuming C is the correct choice, it implies that the specific calculations based on the provided data (not given in the question) lead to an income of $106,600 under absorption costing.
Learning Objectives
- Examine the distinctions and similarities between income computations using absorption costing and variable costing, noting the effects on financial statements and the process of making decisions.
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