Ellis Corporation The Following Information Was Extracted from the First Year Absorption-Based

question 177

Multiple Choice

Ellis Corporation
The following information was extracted from the first year absorption-based accounting records of Ellis Corporation

• A)$9.50 higher.
• B)$11.00 higher.
• C)$8.50 higher.
• D)$8.33 higher.

Total fixed costs incurred	$100,000
Total variable costs incurred	50,000
Total period costs incurred	70,000
Total variable period costs incurred	30,000
Units produced	20,000
Units sold	12,000
Unit sales price	$12

Refer to Ellis Corporation.Based on variable costing,if Ellis had sold 12,001 units instead of 12,000,its income before income taxes would have been

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Definitions:

Proxy Right

A right granted to an individual or group to vote on behalf of another person, usually a shareholder, in corporate decisions and elections.

Financial Leverage

The use of borrowed money (debt) to finance the purchase of assets, with the expectation that the income or capital gain from the assets will exceed the cost of borrowing.

Voting Right

The entitlement of the shareholders of a company to vote on corporate policy, including decisions regarding the corporate board.

Treasury Stock

Shares that were issued and subsequently reacquired by the company, reducing the amount of outstanding stock on the open market.