Use the Following Information for Questions

question 89

Multiple Choice

Use the following information for questions
Sprinkle Co. sells its product for $60 per unit. During 2019, it produced 60,000 units and sold 50,000 units (there was no beginning inventory) . Costs per unit are: direct materials $15, direct labor $9, and variable overhead $3. Fixed costs are: $720,000 manufacturing overhead, and $90,000 selling and administrative expenses.
-Under absorption costing, what amount of fixed overhead is deferred to a future period?

• A) $30,000
• B) $120,000
• C) $150,000
• D) $720,000

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Definitions:

Exchange Rate Risk

The potential for loss due to fluctuating foreign exchange rates affecting international financial transactions.

Forward Currency

A contract to exchange a specific amount of one currency for another at a future date and at a predetermined rate, used to hedge against currency risk.

Premium

An amount paid in addition to the standard or nominal cost, often associated with insurance, bonds, or the difference above a product's nominal value.

Spot Rate

The current market price at which a particular asset, such as currency, commodity, or security can be bought or sold for immediate delivery.