WebFlicks Is an Online DVD Company That Produces Its Own

question 54

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 inventory at the end of the month under variable costing?

• A)$72,000
• B)$148,500
• C)$174,900
• D)$84,800

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Definitions:

Articles of Partnership

A document that outlines the rules and guidelines for the operation of a partnership, including the responsibilities and profit-sharing among partners.

Capital Balances

The amount of money that partners or shareholders have invested in a company, not withdrawn, and recorded in capital accounts.

Net Loss

The amount by which total expenses exceed total revenues for a business, indicating financial loss.

Salary

A fixed amount of money or compensation paid to an employee by an employer in return for work performed.