Letcher Corporation Manufactures and Sells One Product

question 202

Multiple Choice

Letcher Corporation manufactures and sells one product. The following information pertains to the company's first year of operations: The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 44,700 units and sold 43,200 units. The company's only product is sold for $183 per unit.The company is considering using either super-variable costing or a variable costing system that assigns $21 of direct labor cost to each unit that is produced. Which of the following statements is true regarding the net operating income in the first year?

• A) Variable costing net operating income exceeds super-variable costing net operating income by $109,500.
• B) Super-variable costing net operating income exceeds variable costing net operating income by $109,500.
• C) Variable costing net operating income exceeds super-variable costing net operating income by $31,500.
• D) Super-variable costing net operating income exceeds variable costing net operating income by $31,500.

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Definitions:

Negotiation

The process of discussing and arriving at a mutual agreement between two or more parties with differing interests.

Primary Goals

The main objectives or aims that an individual, group, or organization seeks to achieve in a given timeframe.

Distributive Negotiation

A negotiation approach focusing on dividing a fixed amount of resources, often leading to a win-lose scenario.

Integrative Negotiation

A negotiation strategy focused on collaboration between parties to find solutions that satisfy the interests of both, often resulting in a win-win outcome.