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

question 68

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 amount of fixed overhead deferred under absorption costing?

• A) $0
• B) $3,200
• C) $4,000
• D) $67,200

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Definitions:

Investment

Allocating resources, such as capital or time, with the expectation of generating an income or profit.

Interest

The cost of borrowing money, typically expressed as a percentage of the amount borrowed, or the income earned from deposited funds.

Interest Rate

The proportion, in percentage, charged on the total amount borrowed or earned on the deposited amount over a specific time period.

Borrowed

Something obtained or received temporarily with the intention of returning it or its equivalent value.