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

question 4

Multiple Choice

(Appendix 6A) Letcher 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 56,000 units and sold 54,000 units. The company's only product is sold for $227 per unit.
-The net operating income for the year under super-variable costing is:

• A) $1,604,000
• B) $1,404,000
• C) $1,582,000
• D) $1,728,000

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Definitions:

Direct Materials

Raw materials that can be directly attributed to the production of goods, considered a variable cost in manufacturing.

Continuous Process

A production process in which raw materials are continuously fed into the process and products are continuously output.

Applied Factory Overhead

Costs indirectly associated with manufacturing, including expenses such as utilities and management salaries, allocated to specific products or departments.

Direct Materials

Raw materials that are directly traceable to the manufacturing of a specific product.