Fields Cutlery, a manufacturer of gourmet knife sets, produced 20,000 sets and sold 23,000 units during the current year. Beginning inventory under absorption costing consisted of 3,000 units valued at $66,000 (Direct materials $12 per unit; Direct labor, $3 per unit; Variable Overhead, $2 per unit, and Fixed overhead, $5 per unit.) All manufacturing costs have remained constant over the 2-year period. At year-end, the company reported the following income statement using absorption costing:Sales (23,000 × $45)$1,035,000 Cost of goods sold (23,000 × $22) 506,000 Gross margin$529,000 Selling and administrative expenses 115,000 Net income$414,000 60% of total selling and administrative expenses are variable. Compute net income under variable costing.
A. $644,000
B. $529,000
C. $414,000
D. $399,000
E. $429,000
Answer: E
You might also like to view...
Lambda assumes that the variables are measured on an ordinal scale
Indicate whether the statement is true or false
Management's authorization of transactions relates to a control activity in the accounting system
Indicate whether the statement is true or false
Caverun Co has two classes of stock. The company may:
a. issue stock warrants, which are short-term options to buy shares. b. issue stock rights, which are long-term options to buy shares. c. not use stock options to make one class of stock more attractive than the other. d. use stock options and warrants, the form and content of which are determined by the board of directors, to supplement compensation plans for directors, officers, and employees. e. Both issue stock warrants, which are short-term options to buy shares and also issue stock rights, which are long-term options to buy shares.
A travel agent adds value by creating an itinerary that includes transportation, accommodations, and activities that are customized to your budget and travel dates. In terms of the value-chain analysis, this is an example of a ________ organization.
A. retail B. service C. travel D. manufacturing