Elbrege Corporation Manufactures a Single Product

question 154

Multiple Choice

Elbrege Corporation manufactures a single product. The company has supplied the following data:
There was no beginning inventory. During the year 25,000 units were produced and 20,000 units were sold.
-What is the net operating income for the month under absorption costing?

• A) $8,700
• B) $5,700
• C) $14,400
• D) $(12,000)

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Definitions:

Marginal Cost

The increase in total cost that arises from producing an additional unit of a good or service.

Average Variable Cost

The total variable costs (costs that change with the level of output) divided by the quantity of output produced.

Average Fixed Cost

The total fixed costs of production divided by the quantity of output produced, illustrating how fixed costs per unit change with output levels.

MC

Marginal Cost, the cost of producing one additional unit of a good.