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

question 98

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 inventory under full costing at December 31, 2014?

• A) $150,000
• B) $275,000
• C) $200,000
• D) $325,000

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Definitions:

Accommodation of Reflexes

A process in developmental psychology where infants modify their innate reflexes in response to environmental stimuli.

Tertiary Circular Reactions

Cognitive processes observed in children between 12 and 18 months of age, marked by the deliberate experimentation with variations of previous actions to see the consequences.

Five Senses

The traditional senses of sight, hearing, touch, taste, and smell, which provide information about the environment to the brain.

Deferred Imitation

The ability to replicate an action or behavior after a delay, indicating a form of memory and cognitive development.