A Company Has the Following Information for Its First Month

question 9

Multiple Choice

A company has the following information for its first month of operations: $\begin{array}{ll}\text { Raw materials used } & \$ 25,000 \\\text { Sales ( } \$ 65 \text { per unit) } & \$ 78,000 \\\text { Direct labor } & \$ 42,000 \\\text { Variable factoryoverhead } & \$ 17,000 \\\text { Fixed } &\\factory\\overhead&\text { unknown }unknown\\Variable\\sellingand\\administrative&\$3,000\\\text { Fixed sellingand administrative } & \$ 5,000 \\\text { Grossprofit } & \$ 30,000 \\\text { Contributiormargin } & \text { unknown }\\\text { Ending inventories: }\\\text { Raw materials } & \$ 7,000 \\\text { WIP } & \text { none } \\\text { Finished goods } & 1,200 \text { units }\end{array}$ were sold during the period.

• A) 1,200 units
• B) 2,400 units
• C) 0 units
• D) 3.600 units

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Definitions:

Initial Investments

The upfront costs required to start a new project, business venture, or investment, including equipment, inventory, and property.

Initial Investments

The upfront capital put into a project or business to get it started.

Income Taxes

Taxes imposed by the government on individuals or entities based on their net income or profit.

After-Tax Discount Rate

This refers to the rate of return on an investment after accounting for taxes, used in capital budgeting to assess the value of future cash flows.