(Appendix 10A) Allen, Inc. Has the Following Disbursements

question 46

Multiple Choice

(Appendix 10A) Allen, Inc. has the following disbursements:
*Variable manufacturing costs are $3 per unit. They are paid 40% in the month of purchase and 60% in the following month. Purchases are made in the month of production.
*Fixed overhead is $2,000, including $500 amortization. Overhead costs are paid as incurred.
*Selling costs are $1,500 per month plus $1 per unit sold and are paid in the month incurred.
*Production for January, February, and March was 3,000, 2,000, and 1,200 units, respectively.
*Sales for the 3 months were 1,000, 2,500, and 1,000 units, respectively.
What is the amount of cash disbursements for February?

• A) $13,300
• B) $12,300
• C) $12,800
• D) $ 7,400

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Definitions:

Demand Schedule

A table that shows the quantity of a good or service demanded at various prices.

Nondiscriminating Monopolist's Demand Curve

The demand curve faced by a monopolist who charges the same price to all customers, reflecting the total market demand for its product.

Average Revenue

Average revenue is the amount of turnover a company generates per unit of product sold, calculated by dividing total revenue by the number of units sold.

Pure Monopolist

A market structure in which a single seller controls the entire supply of a product or service, and there is no close substitute.