Kellman Corporation Kellman Corporation Produces a Single Product That Sells

question 144

Multiple Choice

Kellman Corporation Kellman Corporation produces a single product that sells for $7.00 per unit.Standard capacity is 100,000 units per year; 100,000 units were produced and 80,000 units were sold during the year.Manufacturing costs and selling and administrative expenses are presented below.
There were no variances from the standard variable costs.Any under- or overapplied overhead is written off directly at year-end as an adjustment to cost of goods sold.
Kellman Corporation had no inventory at the beginning of the year.
Refer to Kellman Corporation.What is the net income under absorption costing?

• A)$50,000
• B)$80,000
• C)$90,000
• D)$120,000

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Definitions:

Quality Of Income Ratio

A ratio that measures the proportion of income generated from the core operations of a business.

Operating Assets

Assets used by a company in its daily operations to generate income, including machinery, buildings, and equipment.

Revenue Recognition

The accounting principle that determines the specific conditions under which income becomes realized or earned as revenue.

Quality Of Income Ratio

A financial metric assessing the proportion of income that is realized in cash, indicating the reliability of reported earnings.