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Gekata [30.6K]
3 years ago
5

When switching from a traditional costing system to an activity-based costing system that contains some batch-level costs: Multi

ple Choice the unit product costs of both high and low volume products typically increase. the unit product costs of both high and low volume products typically decrease. the unit product costs of high volume products typically increase and the unit product costs of low volume products typically decrease. the unit product costs of high volume products typically decrease and the unit product costs of low volume products typically increase.
Business
1 answer:
Naddika [18.5K]3 years ago
3 0

Answer:

Option D- The unit product costs of high volume products typically decrease and the unit product costs of low volume products typically increase.

Explanation:

The reason is that the company has batch level costs which are fixed indirect costs that are to be assigned to the product and are fixed amounts say $100. Also assume that there are two type of units, Unit A and B. Suppose that the batch cost any number of units of A produced will remain the same and similarly for product B. This means if the units produced of A are at 20 unit per batch and product B produced are 10 units per batch then Activity Based Costing says that the unit cost of batch cost absorbed in Product A would be $5 ($100 / 20) and that for product B would be $10 ($100 / 10). So this example better explains cost behavior of batch cost which is fixed for different levels of production.

This means the fixed cost per unit which decreases with increase in production will keep decreasing if the number of units produced starts increasing. In other words, the similar class of units if are produced in higher quantity then the cost per unit will be decreased due to decrease in fixed cost per unit and vice versa.

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Wayman Corporation reports the following amounts in its December 31, 2018, income statement. Sales revenue $ 376,000 Income tax
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Answer:

                                          <u>Wayman Corporation</u>

                <u>Income statement for the year ended December 31, 2018</u>

                                                        Amount in $       Amount in $

Sales revenue                                                              432,000    

Cost of goods sold                                                       <u>(136,000)</u>

Gross profit                                                                  296,000

<u>Operating expenses</u>

Salaries expense                                   46,000

Advertising expense                             36,000

Utilities expense                                    56,000          (138,000)

Operating income                                                         158,000

<u>Non-operating or other</u>

Interest expense                                                           (26,000)

Income before income taxes                                        132,000

Income tax expense                                                    <u> (56,000)</u>

Net income                                                                  <u> </u><u>   76,000</u>

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A multiple income statement is one in which incomes and expenses are classified under operating and non-operating heads. Like other forms of income statement, it shows the income and expenses of an entity for a given period of time.

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3 years ago
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Answer:

1. Merchandise held on consignment for Trout Creek Clothing.

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