Question

Farris Corporation, which has only one product, has provided the following data concerning its most recent month of operations:

Selling price	$172
Units in beginning inventory	0
Units produced	9,700
Units sold	9,300
Units in ending inventory	400

Variable costs per unit:
Direct materials	$ 33
Direct labor	$ 75
Variable manufacturing overhead	$ 21
Variable selling and administrative expense	$ 25
Fixed costs:
Fixed manufacturing overhead	$145,500
Fixed selling and administrative expense	$ 10,300

What is the net operating income for the month under absorption costing?

Multiple Choice

• $11,600

• $40,000

• $17,600

• $6,000

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Bristo Corporation has sales of 1,440 units at $50 per unit. Variable expenses are 25% of the selling price. If total fixed expenses are $42,000, the degree of operating leverage is:

Multiple Choice

• 6.00

• 1.50

• 4.50

• 1.67

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Dake Corporation's relevant range of activity is 4,100 units to 9,500 units. When it produces and sells 6,800 units, its average costs per unit are as follows:

	Average Cost per Unit
Direct materials	$ 6.70
Direct labor	$ 3.80
Variable manufacturing overhead	$ 1.45
Fixed manufacturing overhead	$ 2.50
Fixed selling expense	$ 1.05
Fixed administrative expense	$ 0.75
Sales commissions	$ 0.85
Variable administrative expense	$ 0.75

If 5,800 units are produced, the total amount of direct manufacturing cost incurred is closest to:

Multiple Choice

• $60,900

• $76,270

• $69,310

• $83,810

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Babuca Corporation has provided the following production and total cost data for two levels of monthly production volume. The company produces a single product.

Production volume	13,800 units	15,000 units
Direct materials	$ 894,240	$ 972,000
Direct labor	$ 255,300	$ 277,500
Manufacturing overhead	$ 1,010,600	$ 1,025,360

The best estimate of the total cost to manufacture 14,200 units is closest to: (Round your intermediate calculations to 2 decimal places.)

Multiple Choice

• $2,105,140

• $2,175,070

• $2,198,380

• $2,245,000

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Gabuat Corporation, which has only one product, has provided the following data concerning its most recent month of operations:

Selling price	$ 141
Units in beginning inventory	0
Units produced	2,500
Units sold	2,080
Units in ending inventory	420

Variable costs per unit:
Direct materials	$ 40
Direct labor	$ 31
Variable manufacturing overhead	$ 7
Variable selling and administrative expense	$ 7
Fixed costs:
Fixed manufacturing overhead	$50,000
Fixed selling and administrative expense	$18,720

The total gross margin for the month under the absorption costing approach is:

Multiple Choice

• $89,440

• $70,720

• $74,880

• $145,600

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Rotonga Manufacturing Company leases a vehicle to deliver its finished products to customers. Which of the following terms correctly describes the monthly lease payments made on the delivery vehicle?

	Direct Cost	Fixed Cost
A)	Yes	Yes
B)	Yes	No
C)	No	Yes
D)	No	No

Multiple Choice

• Choice A

• Choice B

• Choice C

• Choice D

Answer 1