Question: 1) An increase in inventory will result in _____ net operating income when using absorption costing as opposed to variable costing. A. higher B. equal
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 |
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