A Company Has the Following Information for Its First Month

question 40

Multiple Choice

A company has the following information for its first month of operations: $$\begin{array} { l r } \text { Raw materials used } & \$ 37,500 \\\text { Sales } \$ 97.50 \text { per unit) } & \$ 117,000 \\\text { Direct labor } & \$ 63,000 \\\text { Variable factory overhead } & \$ 25,500 \\\text { Fixed factory overhead } & \text { unknown } \\\text { Variable selling and administrative } & \$ 4,500 \\\text { Fixed selling and administrative } & \$ 7,500 \\\text { Gross profit } & \$ 45,000 \\\text { Contribution margin } & \text { unknown }\end{array}$$ The company sold half of the 2,400 units it produced._____ of factory overhead is included in the ending inventory under absorption costing.

• A)$18,000
• B)$9,000
• C)$12,600
• D)$-0-

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Definitions:

Stockholders' Equity

The ownership interest of shareholders in a corporation, represented by the company's assets minus its liabilities.

Ownership Claim

A declaration or assertion of legal rights to possess and use property.

Note Payable

A written promise to pay a specific amount of money, usually with interest, by a certain date.

Money Borrowed

Funds that have been provided by one party to another under the condition that it will be returned, often with interest.