If managers make processing or selling decisions using incremental revenue/incremental cost approach, which of the following statements is TRUE?
A)The resulting budgeted product-line income statement under the sales value at splitoff method, will show each product to have a positive operating income.
B)The resulting budgeted product-line income statement under the physical measure method, will show each product to have a positive operating income.
C)The resulting budgeted product-line income statement under the constant gross margin NRV method, will show each product to have a positive (or zero)operating income.
D)Estimated net realizable method the resulting budgeted product-line income statement under the estimated NRV method, will show each product to have a zero operating income.
E)The resulting budgeted product-line income statement under the sales value at splitoff method, will show each product to have a negative operating income.

Question

Quizplus · Accepted Answer

The incremental revenue/incremental cost approach focuses on the revenue and costs associated with each product line. The constant gross margin NRV method calculates the budgeted product-line income by deducting estimated variable costs from the estimated total revenue, which results in a constant gross margin percentage. Thus, each product will have a positive (or zero) operating income.

If Managers Make Processing or Selling Decisions Using Incremental Revenue/incremental