Aerotrino Produces and Sells Popular T-Shirts During 2014, the Company Produced 400,000 T-Shirts and Sold 350,000

question 40

Multiple Choice

Aerotrino produces and sells popular t-shirts. Following is information about its t-shirts for 2014: $\begin{array}{ll}\text { Selling price }& \$ 15.00 \text { per } t \text {-shirt } \\\text { Variable costs: }\\\text { Production (manufacturing costs) } & \$ 3.00 \text { per } t \text {-shirt } \\\text { Selling \& administration } & \$ 1.00 \text { per } t \text {-shirt }\\\text { Fixed costs: }\\\text { Production (manufacturing costs) } & \$ 1,000,000 \text { per year } \\\text { Selling \& administration } & \$ 2,000,000 \text { per year }\end{array}$ During 2014, the company produced 400,000 t-shirts and sold 350,000 of them. Assume that there was no beginning inventory. How much is the net income under full costing?

• A) $975,000
• B) $1,400,000
• C) $850,000
• D) $2,250,000

---

Definitions:

Bacterial Endocarditis

An infection of the inner lining of the heart chambers and valves, typically caused by bacteria.

Hemorrhages

Excessive bleeding that occurs inside or outside the body, potentially life-threatening if not managed promptly.

Nailbed

The skin beneath the nail plate that is responsible for supporting nail growth.

Hyperopia

A common eye condition also known as farsightedness, where distant objects can be seen more clearly than close ones.