A Business Operated at 100% of Capacity During Its First

question 84

Multiple Choice

A business operated at 100% of capacity during its first month and incurred the following costs: If 600 units remain unsold at the end of the month, what is the amount of inventory that would be reported on the absorption costing balance sheet?

• A) $24,300
• B) $28,200
• C) $22,800
• D) $34,000

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Definitions:

Inventories

The total amount of goods available for sale and raw materials available to produce those goods held by a company.

Subsidiary Entity

A company that is controlled by another company, often referred to as the parent company, through ownership of more than half of the subsidiary's voting stock.

Parent Entity

A business that controls one or more subsidiary companies.

Deferred Tax Asset

A financial item on a company's balance sheet that reduces future tax liabilities due to deductible temporary differences, losses, or credits.