(Appendix 6A) Union Corporation Manufactures and Sells One Product

question 7

Multiple Choice

(Appendix 6A) Union Corporation manufactures and sells one product. The following information pertains to the company's first year of operations:
The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 24,000 units and sold 17,000 units. The company's only product is sold for $232 per unit.
-Assume that the company uses an absorption costing system that assigns $22 of direct labor cost and $68 of fixed manufacturing overhead to each unit that is produced.The net operating income under this costing system is:

• A) $(102,000)
• B) $374,000
• C) $(830,000)
• D) $(256,000)

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Definitions:

Interest Payable

A liability account that represents the amount of interest expense that has been incurred but not yet paid to creditors.

Correcting Entries

Adjustments made in accounting records to amend errors or omissions in the previously recorded transactions.

Accumulated Depreciation

The aggregate cost of a tangible asset that has been amortized as a depreciation expense from the time the asset started being used.

Trial Balance

A bookkeeping worksheet in which the balances of all ledgers are compiled into debit and credit account column totals that are equal.