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vladimir2022 [97]
3 years ago
12

When the number of units in work in process and finished goods inventories decrease, absorption costing net operating income wil

l typically be greater than variable costing net operating income.
a. True
b. False
Business
1 answer:
Nastasia [14]3 years ago
7 0

Answer:

b. False

Explanation:

The difference between absorption costing net operating income and variable costing net operating income lies in the <em>fixed costs deferred in closing inventory</em>.

If Production is greater than Sales - <u>Increase in Finished Goods Inventory</u>, Absorption costing net operating income  will typically be greater than Variable costing net operating income.

However, If Production is less than Sales - <u>Decrease in Finished Goods Inventory</u>, Absorption costing net operating income  will typically be less than Variable costing net operating income.

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Tomtit [17]

Answer:

Total PV= $25,072.57

Explanation:

Giving the following information:

Cash flows:

Cf1= $6,100

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<u>To calculate the present value, we need to use the following formula on each cash flow:</u>

PV= Cf / (1+i)^n

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PV2= 11,100 / 1.15^2= 8,393.19

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Total PV= $25,072.57

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