Under the absorption costing method, a company can increase profits simply by increasing the number of units produced. True or False True False
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- Which of the following statements is true? 1. Under the absorption costing method, a company can increase profits simply by increasing the number of units produced. II. Under absorption costing, a portion of fixed manufacturing overhead cost is released from inventory when production volume exceeds sales volume. Multiple Choice O O Neither statement is true. Only statement II is true. Only statement I is true. Both statements are true.Is there any way to show high net operating income without increasing sales under theabsorption costing?. A company can use cost-volume-profit analysis to determine the level of sales required to earn a target profit. TRUE OR FALSE
- Which of the following is NOT correct about Contribution concept? Select one: a. Contribution can be calculated by using total values or per-unit values. b. Contribution helps to recover fixed costs of the company. c. Contribution is the difference between sales and fixed costs. d. At break-even point, contribution is equal to fixed costs.In an effort to achieve short-run profit maximization, a company that faces constraints, such as a shortage of labor, should prioritize the sale of the product with O the highest selling price per unit of constraining factor. O the lowest cost per unit of constraining factor. O the highest contribution margin per unit. O the highest contribution per unit of constraining factor.The objective of management, under absorption costing, is that each product recovers its full cost and leaves something towards profit as a return on investment. Explain the concept of Absorption Costing by providing a suitable numerical example.and find the profit using the same method ?
- S1: When using absorption costing, a company may be able to show a profit even if it is operating below the breakeven point. S2: Variable costing is more compatible with cost-volume-profit analysis than is absorption costing. a. both are true b. both are false c. S1 is true d. S2 is trueWhen the total contribution margin is greater than total fixed costs, a company has Select one: a. Higher variable cost and fixed cost. b. A net loss c. Zero profit. d. Net income.Break-even analysis is concerned with determining a point at which the company can minimize total cost and maximize total revenue. At that point, the company makes the highest profit. Select one: O True O False Next page empt
- If a company chooses a price to charge for its product by adding up all the expenses necessary to make the product and then adding in a profit, this is known as: a) Target Costing Ob) Skimming Pricing Oc) Cost-Based Pricing Od) Odd-Even Pricing Oe) Penetration PricingVariable costing income will be greater than absorption costing income when: a. Sales is greater than production. b. contribution pricing is applied c. Production is less than or equal to sales. d. Production is greater than salesIf a company increases its fixed costs for Product B, then the contribution margin per unit will a. increase. b. decrease. c. remain the same. d. More information needed.