During Its First Year of Operations, the McCormick Company Incurred

question 88

Multiple Choice

During its first year of operations, the McCormick Company incurred the following manufacturing costs: Direct materials, $5 per unit, Direct labor, $3 per unit, Variable overhead, $4 per unit, and Fixed overhead, $250,000. The company produced 25,000 units, and sold 20,000 units, leaving 5,000 units in inventory at year-end. Income calculated under variable costing is determined to be $315,000. How much income is reported under absorption costing?

• A) $315,000
• B) $265,000
• C) $565,000
• D) $365,000

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Definitions:

Continental Shelf

The extended perimeter of each continent that lies under the ocean and stretches from the coastline to a sharp drop-off into the deep ocean floor.

Summer

Summer is one of the four temperate seasons, characterized by warmer weather, longer days, and typically occurs between spring and autumn.

Temperate Lakes

Freshwater lakes found in regions with moderate climates, often characterized by distinct seasonal temperature variations.

Epilimnion

The upper layer of water in a stratified lake, characterized by warmer temperatures and high levels of dissolved oxygen.