The Crab Shack Experienced the Following Costs in 2014 (Assume

question 12

Multiple Choice

The Crab Shack experienced the following costs in 2014 (Assume the same unit costs in all years) : $\begin{array}{lr}\text { Direct materials }&\$ 2.25 \text { per unit }\\\text { Direct labor }&\$ 1.50 \text { per unit }\\\text { Manufacturing overhead costs }\\\text { Variable } & \$ 1.10 \text { per unit } \\\text { Fixed } & \$ 60,000\\\text { Selling \& administrative costs }\\\text { Variable selling } & \$ 0.80 \text { per unit } \\\text { Fixed selling } & \$ 9,000 \\\text { Fixed administrative } & \$ 13,000\end{array}$ There were 1,800 units in beginning inventory. During the year, the company manufactured 24,000 units and sold 25,000 units. If net income using variable costing was $76,250, how much is net income using full costing?

• A) $5,880
• B) $79,250
• C) $73,750
• D) $74,350

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Definitions:

Pique Technique

A strategy in social influence and compliance that involves making a request in an unusual manner to increase the likelihood of compliance by piquing interest.

Scarcity Principle

A psychological and economic principle stating that limited availability of a resource makes it more desirable and valuable.

Limited-number Technique

A marketing strategy that creates a sense of urgency by claiming a product is in short supply, urging quick consumer action.

Scarcity

A basic economic problem arising from the situation in which finite resources are insufficient to satisfy all human wants and needs.