Docherty,Inc The Operating Income Calculated Using Variable Costing and Absorption Costing

question 126

Multiple Choice

Docherty,Inc.reports the following information for the year ended December 31: $$\begin{array} { | l | r | l | } \hline \text { Units sold } & 600 & \text { units } \\\hline \text { Sales price } & \$ 120 & \text { per unit } \\\hline \text { Direct materials } & \$ 29 & \text { per unit } \\\hline \text { Direct labor } & \$ 8 & \text { per unit } \\\hline \text { Variable manufacturing overhead } & \$ 13 & \text { per unit } \\\hline \text { Fixed manufacturing overhead } & \$ 25 & \text { per unit } \\\hline \text { Variable selling and administrative costs } & \$ 5 & \text { per unit } \\\hline \text { Fixed selling and administrative costs } & \$ 14,500 & \text { per year } \\\hline\end{array}$$ The operating income calculated using variable costing and absorption costing amounted to $9800 and $11,000,respectively.There were no beginning inventories.Determine the total number of units produced during the year.

• A)600 units
• B)648 units
• C)10 units
• D)48 units

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Definitions:

Johnson's Rule

A sequencing rule used in operations management for minimizing job completion time by ordering tasks based on the shortest processing times at two workstations.

Optimal Sequence

The most efficient or effective order in which a series of tasks, events, or activities should be completed to achieve the best outcome.

Total Flow Time

The total time that a product takes to move through the entire production process, from start to finish, including processing and waiting times.

First Scheduled Job

The initial task or operation planned in a sequence of jobs for production or services.