McCoy Corporation Manufactures a Computer Monitor

question 175

Multiple Choice

McCoy Corporation manufactures a computer monitor. Shown below is McCoy's cost structure:
In its first year of operations, McCoy produced 100,000 monitors but only sold 95,000. McCoy's gross margin in this first year was $2,629,600. McCoy's contribution margin in this first year was $2,109,000.
-Under absorption costing,what is McCoy's net operating income for its first year?

• A) $266,000
• B) $786,600
• C) $1,261,600
• D) $2,173,600

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Definitions:

Inventory

The total amount of goods and materials held by a business to be sold or used in production, including raw materials, work-in-progress, and finished goods.

Accounts Payable

Financial obligations that a company has to its vendors, recorded as liabilities on the company's balance sheet.

Accounts Receivable

Amounts receivable by a firm for goods or services rendered to customers, awaiting payment.

Fixed Asset Investment

The acquisition of long-term physical assets by a company to be used in its operations for generating income.