During the Past Year, Carr Company Manufactured 25,000 Units and Sold

question 125

Multiple Choice

During the past year, Carr Company manufactured 25,000 units and sold 20,000 units. Production costs for the year were as follows:
$\begin{array} { | l | r | } \hline \text { Direct materials } & \$ 180,000 \\\hline \text { Direct labour } & 120,000 \\\hline \text { Variable manufacturing overhead } & 210,000 \\\hline \text { Fixed manufacturing overhead } & 250,000 \\\hline\end{array}$ Total sales were $850,000, total variable selling expenses were $110,000, and total fixed selling and administrative expenses were $170,000. There were no units in beginning inventory. Assume that direct labour is a variable cost. Do not round intermediate calculations.

-Under absorption costing,what was the value of the ending inventory for the year?

• A) $152,000.
• B) $179,500.
• C) $213,500.
• D) $222,000.

Understand the advantages of promissory notes receivable over accounts receivable.

Apply the correct formula for calculating interest over different periods and using a standard 360-day year.

Record transactions involving promissory notes correctly in financial statements.

Evaluate the reasons behind using promissory notes in financial transactions.

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Definitions:

Perpetual Cash Flows

Cash flows that are expected to continue indefinitely without an end.

D/E Ratio

Debt-to-Equity Ratio, a measure of a company's financial leverage calculated by dividing its total liabilities by stockholders' equity.

Equity Costs

The cost of obtaining capital through the sale of shares in the company, including dividends payouts and the dilution of share value.

Debt Costs

The total expenses involved in borrowing money, including interest payments and fees.