Joe's Tires,Inc The Operating Income Calculated Using Variable Costing and Absorption Costing

question 103

Multiple Choice

Joe's Tires,Inc.reports the following information for the year ended December 31: $$\begin{array} { | l | r | r|} \hline \text { Units sold } &650& \text { units } \\\hline \text { Sales price } & \$ 130 &\text { per unit } \\\hline \text { Direct materials } & \$ 25 &\text { per unit } \\\hline \text { Direct labor } & \$ 8& \text { per unit } \\\hline \text { Variable manufacturing overhead } & \$ 15 &\text { per unit } \\\hline \text { Fixed manufacturing overhead } & \$ 15& \text { per unit } \\\hline \text { Variable selling and administrative costs } & \$ 6 &\text { per unit } \\\hline \text { Fixed selling and administrative costs } & \$ 14,000& \text { per year } \\\hline\end{array}$$ The operating income calculated using variable costing and absorption costing amounted to $9,100 and $11,200,respectively.There were no beginning inventories.Determine the total fixed manufacturing overhead that will be expensed under absorption costing for the year.

• A)$11,850
• B)$9,750
• C)$26,000
• D)$31,200

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