The Southern Corporation Manufactures a Single Product and Has the Following

question 332

Multiple Choice

The Southern Corporation manufactures a single product and has the following cost structure: Last year, 7,000 units were produced and 6,800 units were sold. There was no beginning inventory.Under absorption costing, the cost of goods sold for the year would be:

• A) $258,400
• B) $394,400
• C) $353,600
• D) $398,400

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Definitions:

Private Cost

The expenses that a company or an individual incurs as a result of its economic activity, excluding any external costs.

Private Value

The value of a good or service to a particular buyer or group of buyers, which may differ from its market price or the value to other buyers.

Deadweight Losses

Economic inefficiencies that occur when supply and demand are not in equilibrium, usually due to government intervention like taxes or subsidies.

Tax On Gasoline

A government-imposed charge on the sale of gasoline, typically used to fund transportation infrastructure or environmental projects.