Xenna Company Manufactures Coffee Tables

question 317

Multiple Choice

Xenna Company manufactures coffee tables. The following data is related to sales and production of the tables for last year.

-Using absorption costing, what is operating income at Xenna Company for last month?

• A) $1,060,200
• B) $1,096,200
• C) $1,206,000
• D) $1,242,000

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Definitions:

Direct Labor-Hours

The cumulative hours employees spend directly participating in the manufacturing process.

Variable Manufacturing Overhead

The portion of manufacturing overhead costs that varies directly with production volume, such as utilities or raw materials.

Predetermined Overhead Rate

A rate used to allocate overhead costs to products or job orders, calculated before the period begins based on estimated overhead costs and an allocation base.

Direct Labor-Hours

The total hours worked by employees directly involved in the production of goods or services.