Figure 8-2

question 62

Multiple Choice

Figure 8-2. Loring Company had the following data for the month:
Fixed overhead is $4,000 per month; it is applied to production based on normal activity of 2,000 units.During the month,2,000 units were produced.Loring started the month with 300 units in beginning inventory,with unit product cost equal to this month's unit product cost.A total of 2,100 units were sold during the month at price of $14.Selling and administrative expense for the month,all fixed,totaled $3,600.
Refer to Figure 8-2.What is operating income under variable costing?

• A)$3,540
• B)$7,980
• C)$11,340
• D)-$540
• E)$3,740

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Definitions:

Coordination Problem

A situation where the components of a system fail to work together effectively, leading to inefficient or undesirable outcomes.

Incentive Problem

A situation where the incentives or motivations of individuals or groups do not align with broader organizational or societal goals.

Continued Losses

Persistent financial deficits experienced by a business over multiple periods, indicating an inability to generate sufficient revenue to cover expenses.

Industry

Denotes a specific group of companies or businesses that produce or sell similar products and services.