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Required information b$.$ Which of the following statements is true regarding the Absorption Costing: Fixed Overhead $(AC$:FOH$)$ bar in the

visualization?

$$240,000$ of the fixed manufacturing overhead is included in cost of goods sold in the income statement and

the remaining $$60,000$ is included in ending finished goods inventory on the balance sheet.

$$240,000$ of the fixed manufacturing overhead is included in cost of goods sold in the balance sheet and the

remaining $$60,000$ is included in ending finished goods inventory on the income statement.

$$60,000$ of the fixed manufacturing overhead is included in cost of goods sold in the income statement and

the remaining $$240,000$ is included in ending finished goods inventory on the balance sheet.

$$60,000$ of the fixed manufacturing overhead is included in cost of goods sold in the balance sheet and the

remaining $$240,000$ is included in ending finished goods inventory on the income statement.

c$.$ Based on a review of the red bars in the visualization, which of the following statements is true?

The absorption costing net operating income is $$60,000$ less than the variable costing net operating income.

The absorption costing net operating income is $$240,000$ greater than the variable costing net operating

income.

The absorption costing net operating income is $$60,000$ greater than the variable costing net operating

income.

The absorption costing net operating income is $$240,000$ less than the variable costing net operating

income.

d$.$ Which of the following statements is true?

The difference between the absorption costing and variable costing net operating incomes $($as shown in the

red bars$)$ is greater than the fixed overhead in ending finished goods inventory under absorption costing $($the

blue bar$).$

The difference between the absorption costing and variable costing net operating incomes $($as shown in the

red bars$)$ is greater than the fixed overhead in ending finished goods inventory under absorption costing $($the

orange bar$).$

The difference between the absorption costing and variable costing net operating incomes $($as shown in the

red bars$)$ equals the fixed overhead in ending finished goods inventory under absorption costing $($the blue bar$).$

The difference between the absorption costing and variable costing net operating incomes $($as shown in the

red bars$)$ equals the fixed overhead in ending finished goods inventory under absorption costing $($the orange

bar$).$

Lynch Company manufactures and sells a single product. The following costs were incurred during the

company's first year of operations:

Variable costs per unit:

Manufacturing:

Direct materials $ $6$

Direct labor

Variable manufacturing overhead $$3$

Variable selling and $$4$

administrative

Fixed costs per year:

Fixed selling and administrative $190,000$

During the year, the company produced $25,000$ units and sold $20,000$ units. The selling price of the

company's product is $$50$ per unit.

Review the Tableau visualization, and answer the questions that follow.

a$.$ Which of the following statements is true regarding the Variable Costing: Fixed Overhead $($VC: FOH $)$ bar in the

visualization?

The $$300,000$ of fixed manufacturing overhead is treated as a period expense on the balance sheet.

The $$300,000$ of fixed manufacturing overhead is treated as a period expense on the income statement.

The $$300,000$ of fixed manufacturing overhead is treated as a product cost on the income statement.

The $$300,000$ of fixed manufacturing overhead is treated as a product cost on the balance sheet.

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