Bethel,Inc What Is the Operating Income Using Variable Costing If 500

question 30

Multiple Choice

Bethel,Inc.has collected the following data.(There are no beginning inventories.) $\begin{array}{|l|r|l|}\hline \text { Units produced } & 530 &\text { units } \\\hline \text { Sales price } & \$140 &\text { per unit } \\\hline \text { Direct materials } & \$17&\text { per unit } \\\hline \text { Direct labor } & \$ 13 &\text { per unit } \\\hline \text { Variable mannufacturing overhead } & \$ 10 &\text { per unit } \\\hline \text { Fixed manufacturing overhead } & \$ 19,200 &\text { per year } \\\hline \text { Variable selling and administrative costs } & \$ 10 &\text { per unit } \\\hline \text { Fixed selling and administrative costs } & \$ 10,000 &\text { per year } \\\hline\end{array}$ What is the operating income using variable costing if 500 units are sold?

• A)$15,800
• B)$45,000
• C)$60,000
• D)$4200

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Definitions:

Adverse Selection

A situation in which sellers have information that buyers do not have, or vice versa, leading to an inefficient market outcome.

Moral Hazard

A situation in which there is a tendency to take riskier behavior when protected from the consequences of that behavior, often seen in insurance and finance.

Asymmetric Information

A situation in economics where one party in a transaction has more or better information than the other, leading to potential imbalances in decisions and market outcomes.

Mechanism Design

A field in economics and game theory that seeks to create economic mechanisms or incentives to achieve desired objectives, often optimizing resource allocation.