1) An increase in inventory will result in _____ net operating income when using absorption costing as opposed to variable costing.
A. higher
B. equal
C. lower
2)
A manufacturing company uses an activity-based costing system with three activity cost pools. The company has provided the following data concerning its costs:
Costs:
Wages and salaries
$400,000
Depreciation
40,000
Occupancy
120,000
Total
$560,000
The distribution of resource consumption across the three activity cost pools is given below:
Activity Cost Pools
Order
Fabricating
Processing
Other
Total
Wages and salaries
80%
15%
5%
100%
Depreciation
70%
25%
5%
100%
Occupancy
40%
50%
10%
100%
How much cost, in total, would be allocated in the first-stage allocation to the Order Processing cost pool?
A. $186,667
B. $280,000
C. $130,000
D. $84,000
1) An increase in inventory will result in _____ net operating income when using absorption costing as opposed to variable costing.
A. | higher | |
B. | equal | |
C. | lower |
2)
A manufacturing company uses an activity-based costing system with three activity cost pools. The company has provided the following data concerning its costs:
Costs: | |
Wages and salaries | $400,000 |
Depreciation | 40,000 |
Occupancy | 120,000 |
Total | $560,000 |
The distribution of resource consumption across the three activity cost pools is given below:
Activity Cost Pools | ||||
Order | ||||
Fabricating | Processing | Other | Total | |
Wages and salaries | 80% | 15% | 5% | 100% |
Depreciation | 70% | 25% | 5% | 100% |
Occupancy | 40% | 50% | 10% | 100% |
How much cost, in total, would be allocated in the first-stage allocation to the Order Processing cost pool?
A. | $186,667 | |
B. | $280,000 | |
C. | $130,000 | |
D. | $84,000 |