Dessa,IncReports the Following Information for the Year Ended December 31

question 104

Multiple Choice

Dessa,Inc.reports the following information for the year ended December 31: $\begin{array}{|l|r|l|}\hline \text { Beginning Finished Goods Inventory } & 50& \text { units } \\\hline \text { Units produced } & 410& \text { units } \\\hline \text { Units sold } & 460 &\text { units } \\\hline \text { Sales price } & \$ 150&\text { per unit } \\\hline \text { Direct materials } & \$ 30& \text { per unit } \\\hline \text { Direct labor } & \$ 10& \text { per unit } \\\hline \text { Variable manufacturing overhead } & \$ 16& \text { per unit } \\\hline \text { Fixed manufacturing overhead } & \$ 15,300& \text { per year } \\\hline \text { Variable selling and administrative costs } & \$ 10 &\text { per unit } \\\hline \text { Fixed selling and administrative costs } & \$ 13,500 &\text { per year }\\\hline\end{array}$ The beginning Finished Goods Inventory costs were $3,500 under absorption costing and $2,800 under variable costing.
What is the operating income using variable costing?

• A)$38,640
• B)$40,200
• C)$9,840
• D)$2,340

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Definitions:

Dividend Payout Ratio

A financial ratio that shows the percentage of a company's earnings distributed to shareholders as dividends.

Market Price

The amount of money a buyer is willing to pay for a good or service in a competitive marketplace.

Dividends

Payments made by a corporation to its shareholders, usually as a distribution of profits.

Common Stock

A type of equity ownership in a corporation, representing a claim on part of the company's profits and assets.