Information from the Records of the Cain Corporation for August

question 214

Multiple Choice

Information from the records of the Cain Corporation for August was as follows:
$\begin{array}{llr} \text {Sales } &\$1,230,000\\ \text { Selling and administrative expenses } &210,000\\ \text { Direct materials used } &264,000\\ \text { Direct labour } &300,000\\ \text {Factory overhead* } &405,000\\\end{array}$
*variable overhead is $205,000,fixed overhead is $200,000
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text { Inventories }$
$\begin{array}{lrr}& \underline{\text {August 1}}& \underline{\text {August 31}}\\\text { Direct materials } & \$ 36,000 & \$ 42,000 \\\text { Work in process } & 75,000 & 84,000 \\\text { Finished goods } & 69,000 & 57,000\end{array}$

-Refer to the figure.What are the variable product costs?

• A)$764,000
• B)$769,000
• C)$969,000
• D)$1,179,000

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Definitions:

Profit-maximizing Equilibrium

A state in which a firm achieves the highest possible profit, given its production costs and market conditions.

Appliance Manufacturer

A company that produces electrical machines and devices for domestic use.

Variable Resources

Inputs or factors of production that can be adjusted in the short term to meet changes in the level of output, such as labor and raw materials.

MRPs

Marginal revenue products, a measure of the additional revenue generated by employing an additional unit of a resource or factor of production.