The Pacific Company Manufactures a Single Product During the Year, 5,000 Units Were Produced and 4,800 Units

question 94

Multiple Choice

The Pacific Company manufactures a single product. The following data relate to the year just completed:
$\begin{array}{|l|r|}\hline \text { Variable costs per unit: } & \\\hline \text { Production } &\$ 43 \\\hline \text { Selling and administrative } & \$ 15 \\\hline \text { Fixed costs in total: } & \\\hline \text { Production } &\$ 145,000 \\\hline \text { Selling and administrative } &\$ 95,000 \\\hline\end{array}$
During the year, 5,000 units were produced and 4,800 units were sold. There were no beginning inventories.

-Which of the following would best describe the relationship between the carrying value of the finished goods inventory at the end of the year under variable costing as opposed to under absorption costing?

• A) $8,800 less than under absorption costing.
• B) The same as absorption costing.
• C) $5,800 less than under absorption costing.
• D) $5,800 more than under absorption costing

Understand the basic concepts and significance of budgeting in management.

Identify the sequential order in which different budgets are prepared.

Recognize the role and structure of the master budget.

Comprehend the process and importance of cash budgeting.

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Definitions:

Model Business Corporation Act (MBCA)

A set of model laws prepared by the American Bar Association to provide a standard for the incorporation and operation of corporations in the United States.

Joint Ventures

Business agreements between two or more entities to undertake a specific project or business activity together.

Retains

From a legal perspective, it refers to keeping possession or continuing to have an attribute, quality, or condition.

Business Activity

Any effort made by people or businesses related to the creation, distribution, or trading of products and services.