Taylor Ltd Just Finished Its Second Year of Operations

question 14

Multiple Choice

Taylor Ltd just finished its second year of operations. In the first year it produced 1,000 units and sold 400. The second year resulted in the same production level, but sales were 1,200 units. The variable costing income statements for both years are shown below: The ending inventory for year 2 using absorption costing would be

• A) $51,000
• B) $34,000
• C) $22,000
• D) $17,000

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Definitions:

Market Price

The price at which a good or service is offered for sale in the open market.

Market Price

The market price at which you can currently buy or sell a service or asset in a specified market.

Negative Economic Profit

A situation where a firm's total revenue is less than its total costs, including opportunity costs.

Market Price

The current value at which an asset or service can be bought or sold in a competitive marketplace.