Red River Company Sells Its Product for $12,000 Per Unit

question 70

Multiple Choice

Red River Company sells its product for $12,000 per unit. Variable costs per unit are: Manufacturing overhead -$8,000
Selling and administrative -$150
Fixed costs are:
Manufacturing overhead -$30,000
Selling and administrative -$40,000
Red River had no beginning inventory at January 1, 2010. Production was 20 units each year in 2010, 2011, and 2012. Sales were 20 units in 2010, 16 units in 2011, and 24 units in 2012.
Income/(Loss) under variable costing for 2012 is:

• A)$12,000.
• B)$16,400.
• C)$40,400.
• D)$48,000
• E)$22,400.

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Definitions:

Merchandise Trade Deficit

A situation where a country's imports of goods exceed its exports of goods, leading to a negative balance of trade.

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