Loring Company Had the Following Data for the Month

question 12

Multiple Choice

Loring Company had the following data for the month:
Fixed overhead is $4,000 per month; it is applied to production based on normal activity of 2,000 units. During the month, 2,000 units were produced. Loring started the month with 300 units in beginning inventory, with unit product cost equal to this month's unit product cost. A total of 2,100 units were sold during the month at price of $14. Selling and administrative expense for the month, all fixed, totaled $3,600.
-Refer to Figure 8-2. What is operating income under variable costing?

• A) $3,540
• B) $7,980
• C) $11,340
• D) -$540
• E) $3,740

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Definitions:

Goods And Services

The products and activities offered by businesses to satisfy the needs and wants of consumers, where goods are tangible items and services are intangible experiences or tasks performed.

Steam Engine

A heat engine that performs mechanical work using steam as its working fluid, pivotal in the development of the Industrial Revolution.

Industrial Revolution

A period of major industrialization that took place during the late 18th and early 19th centuries, marked by significant technological advancements and societal changes.

Nonindustrial Societies

Societies that do not rely heavily on mechanized means of production, instead depending on agriculture, craftsmanship, and manual labor.