Gordon Company Produces a Single Product That Sells for $10

question 114

Multiple Choice

Gordon Company produces a single product that sells for $10 per unit. Last year, there were no beginning inventories, 100,000 units were produced, and 80,000 units were sold. The company has the following cost structure:
$\begin{array} { | l | r | r | } \hline & \text { Fixed Costs } & \text { Variable Costs } \\\hline \text { Raw materials } & - - & \$ 2.00 \text { per unit produced } \\\hline \text { Direct labour } & - - & 1.25 \text { per unit produced } \\\hline \text { Factory overhead } & \$ 120,000 & 0.75 \text { per unit produced } \\\hline \text { Selling and administrative } & 70,000 & 1.00 \text { per unit sold } \\\hline\end{array}$

-What was the operating income under variable costing?

• A) $114,000.
• B) $210,000.
• C) $234,000.
• D) $330,000.

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Definitions:

Complex Organism

An organism made up of many different parts working together in an intricately connected way, often resulting in higher levels of organization and function.

Inputs

Resources, materials, or information that are put into a system or process for processing or production purposes.

Outputs

The results or products that are produced by a system, process, or team, often measured to evaluate performance or success.

Systems Theorist

An expert or researcher who explores complex systems, analyzing how various parts interrelate and influence the whole system.