Krepps Corporation Produces a Single Product

question 146

Multiple Choice

Krepps Corporation produces a single product. Last year, Krepps manufactured 20,000 units and sold 15,000 units. Production costs for the year were as follows: Sales totaled $825,000 for the year, variable selling and administrative expenses totaled $108,000, and fixed selling and administrative expenses totaled $165,000. There was no beginning inventory. Assume that direct labor is a variable cost.Under variable costing, the company's net operating income for the year would be:

• A) $101,250 lower than under absorption costing.
• B) $60,000 lower than under absorption costing.
• C) $101,250 higher than under absorption costing.
• D) $60,000 higher than under absorption costing.

---

Definitions:

Trial Balance

A bookkeeping worksheet in which the balances of all ledgers are compiled into debit and credit account columns to ensure a company's bookkeeping system is mathematically correct.

Chart of Accounts

An organized list of all accounts in an entity’s financial system, used for classifying transactions.

Numbering System

A structured method for assigning unique identifiers to items to facilitate organization, tracking, and retrieval.

Identification

The process of recognizing or establishing the identity of a person or thing.