Gordon Company Produces a Single Product That Sells for $10

question 114

Multiple Choice

Gordon Company produces a single product that sells for $10 per unit. Last year, there were no beginning inventories, 100,000 units were produced, and 80,000 units were sold. The company has the following cost structure:
$\begin{array} { | l | r | r | } \hline & \text { Fixed Costs } & \text { Variable Costs } \\\hline \text { Raw materials } & - - & \$ 2.00 \text { per unit produced } \\\hline \text { Direct labour } & - - & 1.25 \text { per unit produced } \\\hline \text { Factory overhead } & \$ 120,000 & 0.75 \text { per unit produced } \\\hline \text { Selling and administrative } & 70,000 & 1.00 \text { per unit sold } \\\hline\end{array}$

-What was the operating income under variable costing?

• A) $114,000.
• B) $210,000.
• C) $234,000.
• D) $330,000.

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Definitions:

Planning Labor

The act of organizing and allocating workforce resources in anticipation of future work and projects.

Weber's Perspective

A theoretical viewpoint based on the work of sociologist Max Weber, emphasizing the role of bureaucracy, rationalization, and the social aspects of economic action in society.

Traditional Authority

The inherited right of individuals to expect loyalty and obedience from others; authority based in custom and tradition.

Rational-Legal

A concept in sociology that describes a form of governance or organization founded on laws, rules, and procedures rather than on traditional or charismatic authority.