The Crab Shack Experienced the Following Costs in 2017 (Assume

question 35

Multiple Choice

The Crab Shack experienced the following costs in 2017 (Assume the same unit costs in all years) : $\begin{array}{lr}\text { Direct materials }&\$ 2.25 \text { per unit }\\\text { Direct labor }&\$ 1.50 \text { per unit }\\\text { Manufacturing overhead costs }\\\text { Variable } & \$ 1.10 \text { per unit } \\\text { Fixed } & \$ 60,000\\\text { Selling } \& \text { administrative costs }\\\text { Variable selling } & \$ 0.80 \text { per unit } \\\text { Fixed selling } & \$ 9,000 \\\text { Fixed administrative } & \$ 13,000\end{array}$ There were 1,800 units in beginning inventory.During the year, the company manufactured 24,000 units and sold 25,000 units.If net income using variable costing was $76,250, how much is net income using full costing?

• A)$5,880
• B)$79,250
• C)$73,750
• D)$74,350

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Definitions:

Production

The process of creating goods and services from various resources, including labor, raw materials, and machinery.

Selling Expense Budget

An estimated projection of all costs associated with the selling activities of a business for a specific period.

Variable Expense

Expenses that change in proportion to the activity of a business, such as costs for raw materials or production supplies.

Sales Budget

A sales budget estimates the expected sales revenue for a certain period, projecting quantities sold and revenues earned.