The answer is b location of markets
Answer:
The correct option is increases in current liabilities are added to net income.
Explanation:
The rationale for adding increases in current liabilities is that the increase in current liabilities represents cash that should have been paid but retained in the business,hence it is an increase in cash inflow.
The opposite is the case for reduction in current liabilities as the reduction denotes that cash of the business has been used in paying the creditors,hence cash has gone down.The appropriate treatment would to subtract the reduction in current liabilities
Answer:Please refer to the explanation section
Explanation:
The question is incomplete, amounts of production costs like Direct Material, direct labour and Variable/Fixed manufacturing overheard were not given, we will explain the absorption cost and variable cost in detail so that the student would be able to calculate absorption cost and variable cost balances easier.
Absorption costing Method
Total Manufacturing costs are allocated to Finished goods Product. Absorption Costing method assigns or allocates the total cost of Manufacturing or total production costs to units of Finished Goods produced. each unit of finished goods thus represents total costs of production per unit or Total Manufacturing/Production cost is the Balance of Finished Goods.
Total Manufacturing/Production cost = direct labor cost + direct material cost + variable and fixed Manufacturing overheads cost.
Finished Goods Balance = Total Manufacturing/Production cost
A unit of Finished Goods = Total Manufacturing costs/units produced
Variable costing method
Variable costing method fixed manufacturing costs are treated as an expense, Variable Manufacturing costs are the only allocated to inventory. The value or Balance of inventory consist of Variable Manufacturing cost like Direct labor, Direct Material and Variable Manufacturing costs. Finished Goods Balance equals total Variable Manufacturing cost
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