A Company Has the Following Information for the Current Month

question 154

Multiple Choice

A company has the following information for the current month of operations: $\begin{array}{lr}\text { Raw materials used } & \$ 37,500 \\\text { Sales } \$ 97.50 \text { per unit) } & \$ 117,000 \\\text { Direct labor } & \$ 63,000 \\\text { Variable factory overhead } & \$ 25,500 \\\text { Fixed factory overhead } & \text { unknown } \\\text { Variable selling and administrative } & \$ 4,500 \\\text { Fixed selling and administrative } & \$ 7,500 \\\text { Gross profit } & \$ 45,000 \\\text { Contribution margin } & \text { unknown }\\\\\text { Inventories: }&\text { Beginning}&\text { Ending }\\\text { Raw materials } & 0 & \$ 10,500 \\\text { WIP } & 0 & \text { none } \\\text { Finished goods } & 0 & 1,200\text { units }\end{array}$ The cost of goods sold under variable costing is_____.

• A)$63,000
• B)$144,000
• C)$72,000
• D)$126,000

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Definitions:

Straight-Line Method

A method of calculating depreciation of an asset by evenly distributing its cost over its useful life.

Shareholders' Equity

The residual interest in the assets of a corporation that remains after deducting its liabilities, representing the ownership interest of shareholders.

Retained Earnings

The portion of a company's profits not distributed as dividends but reinvested in the business or kept as a reserve.

Common Shares

Units of ownership in a company that grant shareholders rights to vote on company matters and receive dividends, representing equity in the corporation.