The company is considering using either super-variable costing or an absorption costing system that assigns $28 of direct labor cost and $70 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 $6,000.
B)Absorption costing net operating income exceeds super-variable costing net operating income by $588,000.
C)Absorption costing net operating income exceeds super-variable costing net operating income by $6,000.
D)Super-variable costing net operating income exceeds absorption costing net operating income by $588,000.

Question

Quizplus · Accepted Answer

The Answer of The company is considering using either super-variable costing or an absorption costing system that assigns $28 of direct labor cost and $70 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 $6,000.
B)Absorption costing net operating income exceeds super-variable costing net operating income by $588,000.
C)Absorption costing net operating income exceeds super-variable costing net operating income by $6,000.
D)Super-variable costing net operating income exceeds absorption costing net operating income by $588,000.

The Company Is Considering Using Either Super-Variable Costing or an Absorption