Yazzie,Inc The Operating Income Calculated Using Variable Costing and Absorption Costing

question 159

Multiple Choice

Yazzie,Inc.reports the following information for the year ended December 31: $$\begin{array} { | l | r | c | } \hline \text { Units sold } & 590 & \text { units } \\\hline \text { Sales price } & \$ 170 & \text { per unit } \\\hline \text { Direct materials } & \$ 28 & \text { per unit } \\\hline \text { Direct labor } & \$ 12 & \text { per unit } \\\hline \text { Variable manufacturing overhead } & \$ 18 & \text { per unit } \\\hline \text { Fixed manufacturing overhead } & \$ 20 & \text { per unit } \\\hline \text { Variable selling and administrative costs } & \$ 4 & \text { per unit } \\\hline \text { Fixed selling and administrative costs } & \$ 12,200 & \text { per year } \\\hline\end{array}$$ The operating income calculated using variable costing and absorption costing amounted to $9800 and $11,000,respectively.There were no beginning inventories.Determine the total fixed manufacturing overhead that will be expensed under variable costing for the year 2016.

• A) $13,000
• B) $11,800
• C) $28,320
• D) $34,220

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Definitions:

Defaulted

refers to the failure to meet the legal obligations of a loan, such as not making the agreed-upon payments.

Deficiency

A shortfall or lack, especially of something essential or required.

Floating Lien

A security interest in proceeds, after-acquired property, or property purchased under a line of credit (or all three); a security interest in collateral that is retained even when the collateral changes in character, classification, or location.

Collateral

Assets pledged as security for the repayment of a loan, forfeitable in the event of a default.