The company is considering using either super-variable costing or a variable cos
ID: 2468710 • Letter: T
Question
The company is considering using either super-variable costing or a variable costing system that assigns $14 of direct labor cost to each unit that is produced. Which of the following statements is true regarding the net operating income in the first year?
a. Super-variable costing net operating income exceeds variable costing net operating income by $98,000.
b. Variable costing net operating income exceeds super-variable costing net operating income by $98,000.
c. Super-variable costing net operating income exceeds variable costing net operating income by $448,000.
d. Variable costing net operating income exceeds super-variable costing net operating income by $448,000.
Explanation / Answer
a) Super Variable Cosing net operating income exceeds variable costing net operating income by $ 98000.
(7000 X 14)= $ 98000 increase in value of inventory therefore increase in inventory.