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, direct material per unit, direct labor per unit, variable overhead cost per unit, and fixed overhead cost are the same in each year. Ignoring the selling and administrative costs, which of the following statements is not correct?
A. Under variable costing, net operating income for Year 1 and Year 2 would be the same.
B. Because of the changes in production levels, under variable costing the unit product cost will change each year.
C. The total net operating income for all four years combined would be the same under variable and absorption costing.
D. Under absorption costing, net operating income in Year 1 would be less than the net operating income in Year 2.
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, direct material per unit, direct labor per unit, variable overhead cost per unit, and fixed overhead cost are the same in each year. Ignoring the selling and administrative costs, which of the following statements is not correct?
A. Under variable costing, net operating income for Year 1 and Year 2 would be the same.
B. Because of the changes in production levels, under variable costing the unit product cost will change each year.
C. The total net operating income for all four years combined would be the same under variable and absorption costing.
D. Under absorption costing, net operating income in Year 1 would be less than the net operating income in Year 2.