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

question 128

Multiple Choice

Khanam Company, which has only one product, has provided the following data concerning its most recent month of operations:
$\begin{array}{|l|r|}\hline \text { Selling price } & \$ 97 \\\hline \text { Units in beginning inventory } & 500 \\\hline \text { Units produced } & 8,400 \\\hline \text { Units in ending inventory } & 400 \\\hline \text { Variable costs per unit: } & \\\hline \text { Direct materials } & \$ 20 \\\hline \text { Direct labour } & \$ 37 \\\hline \text { Variable manufacturing overhead } & \$ 1 \\\hline \text { Variable selling and administrative } & \$ 11 \\\hline \text { Fixed costs: } & \\\hline \text { Fixed manufacturing overhead } & \$ 67,200 \\\hline \text { Fixed selling and administrative } & \$ 161,500 \\\hline\end{array}$ The company produces the same number of units every month, although the sales in units vary from month to month. The company's variable costs per unit and total fixed costs have been constant from month to month.


-What is the operating income for the month under absorption costing?

• A) $3,200.
• B) $8,500.
• C) $9,300.
• D) $15,100.

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Definitions:

Land Improvements

Enhancements made to a parcel of land to increase its value, such as landscaping, fencing, and adding utilities.

Long-Lived Assets

Assets that provide economic benefits to a company for a period longer than one year, including property, plant, and equipment.

Land Improvements

Enhancements made to land such as landscaping, driveways, and fences that increase the property's value.

Buildings

Refers to permanent structures owned by a company and used for business operations, considered as tangible fixed assets on the balance sheet.