Futon Delight Experienced the Following Costs in 2014 (Assume the Same

question 14

Multiple Choice

Futon Delight experienced the following costs in 2014 (Assume the same unit costs in all years) : $\begin{array}{lr}\text { Direct materials }&\$ 2.00 \text { per unit }\\\text { Direct labor }&\$ 1.00 \text { per unit }\\\text { Manufacturing overhead costs }\\\text { Variable } & \$ 1.50 \text { per unit } \\\text { Fixed } & \$45,000\\\end{array}$ There were 600 units in beginning inventory. During the year, the company manufactured 18,000 units and sold 17,600 units. If net income for the year was $54,000 using full costing, how much will net income be if the company uses variable costing?

• A) $53,000
• B) $50,000
• C) $55,000
• D) More information is needed to determine the answer.

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Definitions:

New-Stock Dividend

A new-stock dividend is a payment made by a corporation to its shareholders in the form of additional shares rather than cash.

Stock Repurchases

The act of a company buying back its own shares from the marketplace, reducing the amount of outstanding stock.

Capital Structure

The mix of different forms of funding used to finance a company's operations and growth, including debt and equity.

Income Tax

A tax levied by governments on the income generated by businesses and individuals within their jurisdiction.