A Company Has the Following Information for Its First Month

question 92

Multiple Choice

A company has the following information for its first month of operations: $\begin{array}{lr}\text { Raw materials used } & \$ 37,500 \\\text { Sales ( } \$ 97.50 \text { per unit) } & \$ 117,000 \\\text { Direct labor } & \$ 63,000 \\\text { Variable factory overhead } & \$ 25,500 \\\text { Fixed factory overhead } & \text { unknown }\\\text { Variable selling and administrative }&\$4,500\\\text { Fixed selling and administrative }&\$7,500\\\text { Gross profit }&\$45,000\\\text { Contribution margin }& \text { unknown }\\\end{array}$ The company sold half of the 2,400 units it produced. of factory overhead is included in the ending inventory under absorption costing.

• A) $12,600
• B) $- 0-
• C) $18,000
• D) $9,000

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Definitions:

Unadjusted Trial Balance

A preliminary list of all accounts and their balances before any adjustments are made for accruals, deferrals, and error corrections.

Accounting Cycle

The sequence of steps followed in the accounting process to track and record business transactions, culminating in the preparation of financial statements.

Post-closing Trial Balance

A financial report created after adjusting and closing entries are made, listing all accounts and their balances to ensure debits equal credits.

Accumulated Depreciation

The total amount of depreciation that has been recorded for an asset since it was acquired.