Freetown Corporation Incurred Fixed Manufacturing Costs of $30,000 During 2017

question 103

Multiple Choice

Freetown Corporation incurred fixed manufacturing costs of $30,000 during 2017. Other information for 2017 includes:
The budgeted denominator level is 2,000 units.
Units produced total 1,800 units.
Units sold total 1,300 units.
Beginning inventory was zero.
The company uses absorption costing and the fixed manufacturing cost rate is based on the budgeted denominator level. Manufacturing variances are closed to cost of goods sold.
Fixed manufacturing costs included in ending inventory total ________. (Round any intermediary calculations to the nearest cent and your final answer to the nearest dollar.)

• A) $8,333
• B) $11,538
• C) $7,500
• D) $0

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Definitions:

Limit Pricing

A strategy where a firm sets the price of its products low enough to discourage new competitors from entering the market.

Price Leadership

A strategy where a leading firm sets prices that other firms in the market follow.

Mutual Interdependence

A situation particularly in oligopolistic markets where the actions of one firm significantly influence the actions and outcomes of other firms within the market.

Price Leadership

A situation where one dominant company in an industry sets the price of goods or services, which other companies then follow.