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:

Priority Rule

A principle or guideline used to determine the order in which tasks, projects, or customers are addressed based on their importance or urgency.

Service Systems

Configurations of technology, processes, people, and other resources that provide services to customers.

Process-Oriented Facilities

Facilities designed to manage and improve the processes involved in production or service delivery, focusing on workflow and efficiency.

Dynamic Scheduling

A strategic approach to arranging, controlling, and allocating resources and tasks in real-time to optimize workflow and efficiency.