WebFlicks Is an Online DVD Company That Produces Its Own

question 49

Multiple Choice

WebFlicks is an online DVD company that produces its own DVD copies of first-run movies that it sells for $8.00 each.The following information is available (Assume the same unit costs in all years) : $\begin{array}{ll}\text { Variable costs: }\\\text { Product royalty fees } & \$ 3.30 \text { per DVD } \\\text { DVD production } & \$ 1.20 \text { per DVD } \\\text { Selling and admin costs } & \$ 0.80 \text { per DVD }\\\text { Fixed costs: }\\\text { Production }&\$ 128,000 \text { per month }\\\text { Selling and administration }&\$ 130,000 \text { per month }\\\end{array}$ During June, 160,000 DVDs were produced and 144,000 were sold.There were 17,000 DVDs in beginning inventory.How much is net income per month under full costing?

• A)$143,600
• B)$130,640
• C)$130,800
• D)None of these answer choices are correct.

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Definitions:

Unearned Fees

Unearned fees are payments received by a company for services yet to be provided or completed, considered a liability until the service is fulfilled.