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

question 57

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:

MARS Model

A framework identifying four factors (Motivation, Ability, Role perceptions, and Situational factors) that influence individual behavior and performance at work.

Ability

The possession of the means or skill to do something, often referring to natural competencies or developed skills.

Intensity

The degree of strength, force, or concentration with which a particular attribute, emotion, or physical phenomenon is experienced or presented.

Conscientiousness

A personality trait characterized by organization, dependability, and a strong sense of duty.