A Company's Operating Income Was $70,000 Using Variable Costing for a Given

question 65

Multiple Choice

A company's operating income was $70,000 using variable costing for a given period. Beginning and ending inventories for that period were 45,000 units and 50,000 units, respectively. Ignoring income taxes, if the fixed factory overhead application rate was $8.00 per unit, what would operating income have been using full costing?

• A) $30,000.
• B) $140,000.
• C) $110,000.
• D) $100,000.
• E) Cannot be determined from the information given.

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Definitions:

Dividend Yield

A financial ratio that indicates how much a company pays out in dividends each year relative to its stock price.

Return on Stockholders' Equity

A measure of the profitability of a corporation in terms of the equity held by its shareholders, indicating how efficiently a company uses its equity base to generate profit.

Net Income

The total profit of a company after all revenues and gains are added together and all expenses and losses are subtracted.

Interest Expense

The cost incurred by an entity for borrowed funds, which is typically charged as a percentage of the principal loan amount.