Question:
The following data were provided by Trusty Corp., which produces a single product:
|
|
Year 1
|
Year 2
|
Year 3
|
|
Units produced
|
6,000
|
7,000
|
5,000
|
|
Units sold
|
6,000
|
6,000
|
6,000
|
The selling price per unit, variable costs per unit, and total fixed costs are the same for each year.
If variable costing is in use, one would expect:
A) net operating income to be erratic over the three-year period.
B) net operating income to be the same for each year.
C) the break-even point to be lower in Year 2 than in Year 3.
D) net operating income to be higher in Year 2 than in Year 1.