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.