Farron Company, Which Has Only One Product, Has Provided the Following

question 124

Multiple Choice

Farron Company, which has only one product, has provided the following data concerning its most recent month of operations: $\begin{array}{|l|r|}\hline \text { Selling price } & \$ 92 \\\hline \text { Units in beginning inventory } & 0 \\\hline \text { Units produced } & 8,700 \\\hline \text { Units sold } & 8,300 \\\hline \text { Units in ending inventory } & 400 \\\hline \text { Variable costs per unit: } & \\\hline \text { Direct materials } & \$ 13 \\\hline \text { Direct labour } & \$ 55 \\\hline \text { Variable manufacturing overhead } & \$ 1 \\\hline \text { Variable selling and administrative } & \$ 5 \\\hline \text { Fixed costs: } & \\\hline \text { Fixed manufacturing overhead } & \$ 130,500 \\\hline \text { Fixed selling and administrative } & \$ 8,300 \\\hline\end{array}$
-What was the operating income (loss) for the month under absorption costing?

• A) ($17,000).
• B) $6,000.
• C) $10,600.
• D) $16,600.

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Definitions:

Bacteria

Microscopic, single-celled organisms found in diverse environments, some of which can cause diseases while others are beneficial for processes such as fermentation or digestion.

Viruses

Microscopic infectious agents that can reproduce only inside the living cells of an organism and are capable of causing diseases.

Production Possibilities Curve

A graphical representation that shows the maximum possible output combinations of two products that can be produced with available resources and technology.

Economic Wants

Desires that can be satisfied through the consumption of goods and services, reflecting the unlimited and varying needs and wishes of consumers.