March Corporation is a general contractor with two divisions: Interior Renovations and Exterior Renovations. Each division has an on-site supervisor who is paid a salary of $165,000 annually and one salaried estimator who is paid $90,000 annually. The corporate office has two office administrative assistants who are paid salaries of $75,000 and $55,000 annually. The president's salary is $200,000. How much of these salaries are common fixed expenses?

An increase in inventory will result in _____ net operating income when using absorption costing as opposed to variable costing.

	A.	higher
	B.	equal
	C.	lower

Companies that utilize an activity-based costing system are encouraged to utilize this costing system when preparing external financial statements so end users of the financial statements can see a more accurate reflection of how the company is performing. True or False?

In multi division companies with large payroll expense but small material expenses (such as legal firms), the best base to allocate common fixed expenses to the divisions is _______.

	A.	headcount (number of employees)
	B.	not applicable
	C.	payroll expense
	D.	revenue

Based on the following assumptions and financial information, select all the true statements. Year 1 Year2 Y Year4 Production in units 4,000 6,000 8,000 4,000 Sales in units 4,000 3,000 3,000 11,000 (1) Selling price per unit, variable cost per unit, and total fixed costs do not change during the four years. (2) There is no beginning inventory at Year 1 A. The combined four year net operating income would be the same under variable and absorption costing. B. Because of the changes in production level, under absorption costing the unit product cost will change each year. C.Under variable costing, net operating income will be less in Year 1 than in Year 2 D. Under absorption costing, net operating income will be the same in Year 2 and Year 3 E. Under variable costing, net operating income will be the same in Year 2 and Year 3