In Its First Year of Operations,a Company Has Sales of $150,000,ending

question 83

Multiple Choice

In its first year of operations,a company has sales of $150,000,ending finished goods inventory of $10,000,variable manufacturing costs of $50,000,and fixed manufacturing costs of $30,000 for the year.The company pays 10% commission to its sales force and has fixed selling and administrative expenses of $25,000 annually.The company has no other variable expenses.Assuming the company uses direct costing,the contribution margin for the year is

• A) $110,000.
• B) $95,000.
• C) $40,000.
• D) $13,000.

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Definitions:

Lot Sizes

The quantity of units produced, ordered, or processed as a batch in manufacturing or supply chain management.

MRP

Material Requirements Planning; a system for managing manufacturing processes through inventory control, scheduling, and procurement.

JIT

Just In Time, a production strategy that aims to reduce in-process inventory and associated carrying costs by producing and delivering products just in time to be sold or used.

Gross Requirements Plan

A schedule that specifies the amount and timing of future material and component requirements necessary to fulfill the production plan.