Routit Corporation had the following sales and production for the past four years: Selling price per unit, variable cost per unit, and total fixed cost are the same each year. There were no beginning inventories in Year 1. Which of the following statements is correct?
A)Under variable costing, net operating income for Year 3 and Year 4 would be the same.
B)Under variable costing, net operating income for Year 2 and Year 3 would be the same.
C)Variable costing net income would exceed absorption costing net income in Year 1.
D)Absorption costing net income would exceed variable costing net income in Year 4.

Question

Routit Corporation had the following sales and production for the past four years:  Selling price per unit, variable cost per unit, and total fixed cost are the same each year. There were no beginning inventories in Year 1. Which of the following statements is correct?
A)Under variable costing, net operating income for Year 3 and Year 4 would be the same. 
B)Under variable costing, net operating income for Year 2 and Year 3 would be the same. 
C)Variable costing net income would exceed absorption costing net income in Year 1. 
D)Absorption costing net income would exceed variable costing net income in Year 4.

Quizplus · Accepted Answer

The Answer of Routit Corporation had the following sales and production for the past four years:  Selling price per unit, variable cost per unit, and total fixed cost are the same each year. There were no beginning inventories in Year 1. Which of the following statements is correct?
A)Under variable costing, net operating income for Year 3 and Year 4 would be the same. 
B)Under variable costing, net operating income for Year 2 and Year 3 would be the same. 
C)Variable costing net income would exceed absorption costing net income in Year 1. 
D)Absorption costing net income would exceed variable costing net income in Year 4.

Routit Corporation Had the Following Sales and Production for the Past