WebFlicks Is an Online DVD Company That Produces Its Own

question 45

Multiple Choice

WebFlicks is an online DVD company that produces its own DVD copies of first-run movies that it sells for $8.00 each. The following information is available (Assume the same unit costs in all years) : $\begin{array}{ll}\text { Variable costs: }\\\text { Product royalty fees } & \$ 3.30 \text { per DVD } \\\text { DVD production } & \$ 1.20 \text { per DVD } \\\text { Selling and admin costs } & \$ 0.80 \text { per DVD }\\\text { Fixed Costs: }\\\text { Production } & \$ 128,000 \text { per month } \\\text { Selling and administration } & \$ 130,000 \text { per month }\end{array}$ During June, 160,000 DVDs were produced and 144,000 were sold. There were 17,000 DVDs in beginning inventory. How much is net income per month under variable costing?

• A) $143,600
• B) $130,800
• C) $130,640
• D) None of these answer choices are correct.

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Definitions:

Herbert Simon

An American economist, political scientist, and cognitive psychologist known for his contributions to decision-making processes and artificial intelligence.

Satisfactory Alternatives

Acceptable options or solutions that are considered adequate for meeting a particular need or solving a problem, albeit not necessarily the best possible ones.

Optimal Decisions

The process of choosing the best possible solution or course of action from among various alternatives based on specific criteria and objectives.

Risk Management

Involves anticipating risks and factoring them into decision making.